HMRC - Payments on account

Dazed_and_C0nfused

1spiral said:

Dazed_and_C0nfused said:

1spiral said:

Swipe said:

1spiral said:

Thanks everyone. You've confirmed what I expected was the case. Wrt the first bullet point, do they give credit interest if it is them that over estimate the amount to pay. I'm currently buying a house so my interest this year will be significantly lower due to having much less cash. 

 you can submit your SA before the 31st July payment is due and the second payment amount will get automatically adjusted down so you don't overpay. 

That was going to be my next question. Thanks for the reply.

Just to be clear your second payment on account won't be adjusted in isolation.

POA have to be within 1 pence of each other so if they were originally say £700 each and your actual liability turned out to be £800 then each POA would be reduced to £400.

If you had paid £700 in January then the £300 you had overpaid would be allocated to the July POA along with some interest from HMRC.

The January POA would not remain £700 and July be £100.

But in practical terms, I would only be paying £100 in July. I think the point you're making here is that due to the rebalancing, there will also be a small amount of interest due to me. Is that correct?

Yeah, you would be paying less than £100.

HMRC's interest rates can change but of you paid £100 on time and it was moved from January to July POA you might be credited with ~£1.50 (which is tax exempt).