Interest on self assessment payment on account

Timaaeee

Dazed_and_C0nfused said:

You could make a claim to reduce both the 2024-25 POA to half of what you expect the 2024-25 Self Assessment liability to be.  But as you will have noted from this thread you are taking a risk of interest charges if you get this wrong.  The safest thing is to file your 2024-25 return before the 2nd POA is payable. 

This will mean both POA will be automatically adjusted to the correct figures if they need to be reduced because the 2024-25 liability is less.  You will be credited with interest for any overpaid tax you paid direct to HMRC for the 1st POA on 31 January.

ok after rereading your comments I think I (finally) understand this now, I'm not sure why I couldn't get my head around it previously - probably because I was dealing with my kids at the time! So what do you do if you realise you will be owing more tax than the POA can you increase them or top up your account before submitting your self assessment?

thanks

[Deleted User]

Timaaeee said:

Dazed_and_C0nfused said:

You could make a claim to reduce both the 2024-25 POA to half of what you expect the 2024-25 Self Assessment liability to be.  But as you will have noted from this thread you are taking a risk of interest charges if you get this wrong.  The safest thing is to file your 2024-25 return before the 2nd POA is payable. 

This will mean both POA will be automatically adjusted to the correct figures if they need to be reduced because the 2024-25 liability is less.  You will be credited with interest for any overpaid tax you paid direct to HMRC for the 1st POA on 31 January.

ok after rereading your comments I think I (finally) understand this now, I'm not sure why I couldn't get my head around it previously - probably because I was dealing with my kids at the time! So what do you do if you realise you will be owing more tax than the POA can you increase them or top up your account before submitting your self assessment?

thanks

You do nothing, paying the balance owing on the 31st January. 

There is no need to increase the payments on account and no interest will be charged no matter by how much they fail to cover the subsequent tax liability. 

So, if you make payments on account of £1500 each for 2024/25 and, upon filing your return, realise a liability of £5000, you are required to pay £2000 on or before 31st January 2026. 

Note though that a payment on account for 2025/26 of £2500 will also be due on that day with an identical payment due on 31st July 2026. 

Dazed_and_C0nfused

Timaaeee said:

Dazed_and_C0nfused said:

You could make a claim to reduce both the 2024-25 POA to half of what you expect the 2024-25 Self Assessment liability to be.  But as you will have noted from this thread you are taking a risk of interest charges if you get this wrong.  The safest thing is to file your 2024-25 return before the 2nd POA is payable. 

This will mean both POA will be automatically adjusted to the correct figures if they need to be reduced because the 2024-25 liability is less.  You will be credited with interest for any overpaid tax you paid direct to HMRC for the 1st POA on 31 January.

ok after rereading your comments I think I (finally) understand this now, I'm not sure why I couldn't get my head around it previously - probably because I was dealing with my kids at the time! So what do you do if you realise you will be owing more tax than the POA can you increase them or top up your account before submitting your self assessment?

thanks

No, the POA can never be increased if your return shows more tax due.

For example if the 2024-25 POA are £1,250 each and your 2024-25 return shows liability of £4,000 then the extra £1,500 will be a Balancing Payment due on 31 January 2026.

Timaaeee

Dazed_and_C0nfused said:

No, the POA can never be increased if your return shows more tax due.

For example if the 2024-25 POA are £1,250 each and your 2024-25 return shows liability of £4,000 then the extra £1,500 will be a Balancing Payment due on 31 January 2026.

so would you have to pay interest in that case or is that only due if you reduce your POA?

[Deleted User]

Timaaeee said:

Dazed_and_C0nfused said:

No, the POA can never be increased if your return shows more tax due.

For example if the 2024-25 POA are £1,250 each and your 2024-25 return shows liability of £4,000 then the extra £1,500 will be a Balancing Payment due on 31 January 2026.

so would you have to pay interest in that case or is that only due if you reduce your POA?

Read my post - no interest!

Dazed_and_C0nfused

Timaaeee said:

Dazed_and_C0nfused said:

No, the POA can never be increased if your return shows more tax due.

For example if the 2024-25 POA are £1,250 each and your 2024-25 return shows liability of £4,000 then the extra £1,500 will be a Balancing Payment due on 31 January 2026.

so would you have to pay interest in that case or is that only due if you reduce your POA?

Interest is charged on anything paid late.

Timaaeee

Dazed_and_C0nfused said

Interest is charged on anything paid late.

  ok thanks