HMRC says "Overdue", but I should have time till 31 Jan 2026 to pay balance for 24-25 tax year !?

AustinZ

I didn't reply before until I checked all my previous account details, there was some confusion on my part as I was PAYE before then went self-employed. In the past I had asked for reduction on payment on account in some years and on some years I had paid too much on first payment on account, hence there was no balance to pay on second payment on account ...

Some years I was charged interest for asking to reduce payment for saying my tax maybe a lot less next year, but it did not happen, but no penalty only interest. So it was something different going on every year, not similar to this year. In fact this year I was paid back some money as interest due to very high first POA, based on previous year, when this year was a lot lower tax... ! (never seen that before.)

So anyway it was not as I thought, only the extra balance after 1st and 2nd POA if any can be paid until 31 Jan 2026. Doing the self- assessment before 31 Jul 2025 only helps to reduce amount of 2nd payment if less tax is due to pay in total (i.e. tax is less than 1st + 2nd POA). But still have to pay that on 31 Jul 2025, I paid on 3 Aug, so far no penalty or interest is showing on my account, so probably they let it go...!

Dazed_and_C0nfused

Good you understand it now.

A basic principle of POA is that they will never be increased because of the tax return for the tax year the POA relate to.  Anything extra will be a Balancing Payment.  Which is payable no earlier than 31 January after the end of the tax year.

The only time POA would increase is if the liability for the previous tax year increases for some reason.

Interest on late paid POA is normal but I don't ever remember seeing a penalty for reducing them too much.  But they could be imposed I think, presumably for deliberate abuse 🤔

sheramber

https://www.gov.uk/hmrc-internal-manuals/enquiry-manual/em4660

......The revised payments should reflect the taxpayer’s views on what payment on account, if any, are due for the current year.

A penalty can be charged where a taxpayer, fraudulently or negligently EM5125, makes an incorrect statement in connection with such a claim.

Where your enquiries show the claim to be excessive you should consider, in appropriate cases, whether penalties may be due. Appropriate cases are those where

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