SA Return - Payments in advance

lr1277

I hope you can help with my confusion. I help my mum complete her tax return using Taxcalc. For many years she didn't pay tax because her income was not high enough.

However my dad died in 2022 so she now gets his widow's pension plus the interest from his savings. Meaning she has to pay tax.

From October 2024 to about December 2024, she got new tax coding notices every 2-3 weeks reducing her tax code so her widow's pension reduced as she paid more tax every month.

So we completed her 23/24 tax return in January 2025. Because she paid tax, this was the first time she made a payment in advance. I can't remember if taxcalc advised that or we decided. My memory is hazy on that point. However I made a note of how much she should pay by 31/07/25. Then a week or 2 ago, HMRC sent her a letter saying that amount that I noted is what she should pay by the end of July.

I know tax returns can be submitted any time after 6th April for the previous tax year. So I thought, lets submit her 24/25 tax return by the end of July 2025.

So I suppose my questions are:

1) Is there a place on the tax return to include the fact the she already made a payment in advance in January 2025? Will that amount be deducted from her 24/25 liability?

2) If we complete the 24/25 return by the end of July and then make a final payment by the end of July, that means she doesn't have to pay the amount demanded by HMRC?

3) As part of submitting the 24/25 tax return in July, do we have to make a payment in advance for 25/26? If so, do we just halve the figure for 24/25 and pay that in July 2025, January 2026 or July 2026?

Many thanks in advance.

Dazed_and_C0nfused

1).  No and no.

2).  No.  She has to pay the amount that needs to be paid.  That will depend on the original 24/25 POA amounts and what her return shows the actual 24/25 liability to be.

3).  No.  Any POA for 25/26 will depend entirely on the liability for 24/25.

You are massively overthinking this.

You need to separate the calculation of her tax liability and how that liability is paid.

The return and subsequent calculation deals purely with how much her liability is.  After the return is submitted her Self Assessment account will be updated to show any payments due or, if necessary, revision to POA.

If you post some rough figures it will be simple to explain what this will look like.  The liability at the bottom of the tax calculations for for 23/24 and 24/25 will be sufficient.

Finally they really aren't "advance" payments.  The 25/26 tax year will be nearly finished before she needs to make any POA for 25/26.  So she is paying tax much later than someone purely paying PAYE tax.

lr1277

Dazed_and_C0nfused said:

1).  No and no.

2).  No.  She has to pay the amount that needs to be paid.  That will depend on the original 24/25 POA amounts and what her return shows the actual 24/25 liability to be.

3).  No.  Any POA for 25/26 will depend entirely on the liability for 24/25.

You are massively overthinking this.

You need to separate the calculation of her tax liability and how that liability is paid.

The return and subsequent calculation deals purely with how much her liability is.  After the return is submitted her Self Assessment account will be updated to show any payments due or, if necessary, revision to POA.

If you post some rough figures it will be simple to explain what this will look like.  The liability at the bottom of the tax calculations for for 23/24 and 24/25 will be sufficient.

Finally they really aren't "advance" payments.  The 25/26 tax year will be nearly finished before she needs to make any POA for 25/26.  So she is paying tax much later than someone purely paying PAYE tax.

Thanks for the information. I won't know more till Sunday when I see mum again and we make progress on completing the return.

Would love to see her self assessment account but cannot register her. She has a Government Gateway ID as this is used to submit her taxcalc return. But just cannot register to see the personal tax account. The ID is not accepted. I don't know if it is because of her surname being recorded differently on different documents/government databases. In one situation she has a one word surname. In another instance she has a 2 word surname. This situation has built up over many years. Not sure how to fix it. HMRC helpdesk were only partially helpful in that they changed her name on the HMRC system to match the name on her passport. But these do not match the name on her driving licence. I suppose we could change her name on her driving licence to match that on her passport, but until the  desire to log into her personal tax account was not allowed, this has not been an issue. Also if change the name on her driving licence, it will mean changing her car insurance policy and the name her car is registered under. I would like to avoid that hassle. 

Nomunnofun1

lr1277 said:

Dazed_and_C0nfused said:

1).  No and no.

2).  No.  She has to pay the amount that needs to be paid.  That will depend on the original 24/25 POA amounts and what her return shows the actual 24/25 liability to be.

3).  No.  Any POA for 25/26 will depend entirely on the liability for 24/25.

You are massively overthinking this.

You need to separate the calculation of her tax liability and how that liability is paid.

The return and subsequent calculation deals purely with how much her liability is.  After the return is submitted her Self Assessment account will be updated to show any payments due or, if necessary, revision to POA.

If you post some rough figures it will be simple to explain what this will look like.  The liability at the bottom of the tax calculations for for 23/24 and 24/25 will be sufficient.

Finally they really aren't "advance" payments.  The 25/26 tax year will be nearly finished before she needs to make any POA for 25/26.  So she is paying tax much later than someone purely paying PAYE tax.

Thanks for the information. I won't know more till Sunday when I see mum again and we make progress on completing the return.

Would love to see her self assessment account but cannot register her. She has a Government Gateway ID as this is used to submit her taxcalc return. But just cannot register to see the personal tax account. The ID is not accepted. I don't know if it is because of her surname being recorded differently on different documents/government databases. In one situation she has a one word surname. In another instance she has a 2 word surname. This situation has built up over many years. Not sure how to fix it. HMRC helpdesk were only partially helpful in that they changed her name on the HMRC system to match the name on her passport. But these do not match the name on her driving licence. I suppose we could change her name on her driving licence to match that on her passport, but until the  desire to log into her personal tax account was not allowed, this has not been an issue. Also if change the name on her driving licence, it will mean changing her car insurance policy and the name her car is registered under. I would like to avoid that hassle. 

Cannot believe that this issue has not yet been resolved! How many years is it going to take? 

lr1277

This is now all sorted. Using taxcalc:

We found how much tax to pay for 24/25 which is not the figure we anticipated when we submitted the 23/24 return.

We were able to enter the payment in advance already made. This then gave us a remaining figure to pay of the 24/25 liability. 

It also told us the amounts to pay for the 25/26 tax year and the dates when those amounts have to be paid.

@Dazed_and_C0nfused was right. I was overthinking it.

Nomunnofun1

lr1277 said:

This is now all sorted. Using taxcalc:

We found how much tax to pay for 24/25 which is not the figure we anticipated when we submitted the 23/24 return.

We were able to enter the payment in advance already made. This then gave us a remaining figure to pay of the 24/25 liability. 

It also told us the amounts to pay for the 25/26 tax year and the dates when those amounts have to be paid.

@Dazed_and_C0nfused was right. I was overthinking it.

To completely understand you need to call the payments made in January 2025 and due to be made at the end of this month payments on account. 

The payment that would have been due on 31st July is almost four months after the end of the 2024/25 tax year. It’s not, therefore, a payment in advance because …..it’s not in advance! 

lr1277

Nomunnofun1 said:

lr1277 said:

This is now all sorted. Using taxcalc:

We found how much tax to pay for 24/25 which is not the figure we anticipated when we submitted the 23/24 return.

We were able to enter the payment in advance already made. This then gave us a remaining figure to pay of the 24/25 liability. 

It also told us the amounts to pay for the 25/26 tax year and the dates when those amounts have to be paid.

@Dazed_and_C0nfused was right. I was overthinking it.

To completely understand you need to call the payments made in January 2025 and due to be made at the end of this month payments on account. 

The payment that would have been due on 31st July is almost four months after the end of the 2024/25 tax year. It’s not, therefore, a payment in advance because …..it’s not in advance! 

Thank you. I understand.

Taxcalc had a box to enter payments made by Jan 2025. Then another box to enter payments made by 31st July 2025.

In the January box I put in the figure that was paid. In the July box, I entered 0. Especially as we have not yet hit 31/07/25.

So in essence one payment in advance was made and as mum is submitting her return before 31/07/25, then the next payment is her final payment for her full liability for 24/25.

Nomunnofun1

lr1277 said:

Nomunnofun1 said:

lr1277 said:

This is now all sorted. Using taxcalc:

We found how much tax to pay for 24/25 which is not the figure we anticipated when we submitted the 23/24 return.

We were able to enter the payment in advance already made. This then gave us a remaining figure to pay of the 24/25 liability. 

It also told us the amounts to pay for the 25/26 tax year and the dates when those amounts have to be paid.

@Dazed_and_C0nfused was right. I was overthinking it.

To completely understand you need to call the payments made in January 2025 and due to be made at the end of this month payments on account. 

The payment that would have been due on 31st July is almost four months after the end of the 2024/25 tax year. It’s not, therefore, a payment in advance because …..it’s not in advance! 

So in essence one payment in advance was made

‘On account’

sheramber

That are payments on account of the final liability. 

mlz1413

The payment on account/ payment in advance is actually 'in Advance' as it is for next year.

I have to pay this too and it was a surprise the first time.

So when a tax bill is over an amount,  say £2000, then an extra 50% is added for payment on 31st Jan and 31st July towards the following year.

So an expected tax bill of £2000 on 31/1/25 becomes £3000.  
Then an extra £1000 is due by 31/7/25.
When the 25/26 return is submitted the £2000 paid on account can be used against that money due.

So it really is In Advance, even compared to PAYE which tax what you earn as you receive it.

Plus your tax code gets reduces at the same time, so you get less of any monthly payments. 

Nomunnofun1

So - the payment on account for 2024/25 which is due on 31st January 2025 is ‘in advance’ of 2024/25 tax year which commenced almost ten months previously, when those on PAYE had paid ten months taxes? That payment is also in respect of self-employed work which would have started to have been earned in April 2024? Can someone on PAYE earn money in April 2024 and not pay ANY tax on it until January 2025? Someone on PAYE has paid 10/12 of tax due while you have likely paid less than half?

The second payment on account for 2024/25 is due on 31st July 2025, four months after the tax year ended when those on PAYE have already paid four months taxes for 2025/26?

The system has not changed since 1997/98.

You also have contrived to mix up your tax years. 

The ‘expected bill’ for £2000, in your example, on 31st January 2025 is for 2023/24 tax year. It become £3000 as a payment on account of £1000 is due for 2024/25 with a further £1000 due in July 2025..

When the 2024/25 tax return is submitted, NOT the 2025/26 return as you state, the £2000 POAs comes off the final tax bill. 

So, as you you have some confusion with the tax years, it is not ‘in advance’ at all?