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Retired and not working but asked to pay tax in advance

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Gudrun
Gudrun Posts: 30 Forumite
Seventh Anniversary 10 Posts
Hello, I have been retired for several years.

Due to several bonds having matured during the 2024025 tax year, the interest I received was higher than usual and I had to pay over £1,000 in income tax for the year.

That was to be expected, but I was also asked to make two advance payments for next year, one by end January 2026 and one by end July 2026.  (I will not be receiving so much interest next year)

Just checking that this sounds correct?   I had thought advance payments only applied to people in work.   Many thanks for any advice.

Comments

  • Dazed_and_C0nfused
    Dazed_and_C0nfused Posts: 17,602 Forumite
    10,000 Posts Fifth Anniversary Name Dropper
    edited 24 July at 1:08PM
    Gudrun said:
    Hello, I have been retired for several years.

    Due to several bonds having matured during the 2024025 tax year, the interest I received was higher than usual and I had to pay over £1,000 in income tax for the year.

    That was to be expected, but I was also asked to make two advance payments for next year, one by end January 2026 and one by end July 2026.  (I will not be receiving so much interest next year)

    Just checking that this sounds correct?   I had thought advance payments only applied to people in work.   Many thanks for any advice.
    They aren't "advance" payments.  The first one is near the end of the tax year!  The second is a few months after the tax year has ended.

    POA can apply to anyone in Self Assessment, being in work is of no relevance.

    You can make a claim to reduce them if you are confident the 2025-26 liability will be less.

    For example if each POA is £550 and you think the actual liability will be £800 you would reduce each POA to £400.

    But if you get this wrong HMRC will charge you interest on any tax you pay late.
  • Isthisforreal99
    Isthisforreal99 Posts: 104 Forumite
    100 Posts Name Dropper
    No, the rules on payments on account (not advance - not getting into that argument again!) apply if your tax bill comes from investment income.

    You can request to reduce them to what you consider a more appropriate level.
  • Ayr_Rage
    Ayr_Rage Posts: 2,743 Forumite
    1,000 Posts Second Anniversary Photogenic Name Dropper
    POAs are a PITA when you have a good year followed by a leaner one, but like death.......
  • Gudrun
    Gudrun Posts: 30 Forumite
    Seventh Anniversary 10 Posts
    edited 24 July at 2:19PM
    Thank you all very much for confirming that this is correct.   And thank you for the warning about interest on late payment of tax.

    Yes it will be a PITA (had to look that up - I'm as innocent in every other aspect of life as I am about finances).
  • sheramber
    sheramber Posts: 22,548 Forumite
    Part of the Furniture 10,000 Posts I've been Money Tipped! Name Dropper
    Ayr_Rage said:
    POAs are a PITA when you have a good year followed by a leaner one, but like death.......
    You can reduce your POA s to account for your estimated lower income.

    Submit your return asap after 6 April and both  POAs requested will be adjusted , iif necessary , to reflect the reduced income amount.


  • Dazed_and_C0nfused
    Dazed_and_C0nfused Posts: 17,602 Forumite
    10,000 Posts Fifth Anniversary Name Dropper
    sheramber said:
    Ayr_Rage said:
    POAs are a PITA when you have a good year followed by a leaner one, but like death.......
    You can reduce your POA s to account for your estimated lower income.

    Submit your return asap after 6 April and both  POAs requested will be adjusted , iif necessary , to reflect the reduced income amount.


    What @sheramber's said really is the best option here.  Pay the first POA and then file your return before July.
  • Gudrun
    Gudrun Posts: 30 Forumite
    Seventh Anniversary 10 Posts
    Yes, many thanks!

    That is a very good idea. :)
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