Reducing HMRC Payments on Account

BreakingGlass

https://forums.moneysavingexpert.com/discussion/comment/81862717#Comment_81862717

Thanks for the heads up about terminology - although I am quite surprised that HMRC's 'processing' isn't automatic and therefore quite quick. Perhaps my account has a special trigger that requires manual intervention, although I can't think of a reason. Anyway, we'll see what happens - I'm not fussed about re-payment interest given the relatively small sums.

EthicsGradient

https://forums.moneysavingexpert.com/discussion/comment/81862717#Comment_81862717

I thought I remembered getting some interest from HMRC when my income in a tax year had turned out to be well below the estimate due to the previous year, which I had paid on account. I tried to work out if it was effectively a worthwhile savings account - I think it was, but I didn't think I could make use of it in future by purposely overpaying. Though the application to reduce the payments complicates the situation.

poblomov

You won't get credit interest if you informally overpay or if you pay early because HMRC don't want to be treated as a bank.

If your formal Payments on Account turn out to be more than your actual liability, you will get credit interest (assuming you make the Payments on Account on time).

@BreakingGlass if you have paid the £1,000, once the claim to reduce your Payments on Account has been processed, there'll be a credit on your Self Assessment account which you can then request to be refunded.

How did you make the claim? If using the "reduce Payments on Account" function in your Self Assessment account, it does seem unusual that it hasn't updated yet

BreakingGlass

https://forums.moneysavingexpert.com/discussion/comment/81862986#Comment_81862986

Thanks for this, and yes I have paid the full £1000.

I made the application online using the 'reduce Payments on Account' option in Self Assessment. Here's a screenshot from HMRC's Form Tracker earlier today:

My wife submitted an almost identical application on the same date, and hers is also still showing as 'in progress'. Perhaps HMRC's 'processing' capacity has been switched to Tax Returns as the deadline approaches.

Anyway, it does seem to be a bit unusual but I'm not too fussed. I will monitor and report back here with any developments.

BreakingGlass

Just to follow up on this …

Having been submitted on 21 Jan, my application to 'reduce payments on account' from approx £1000 to approx £100 was finally processed yesterday, 10 Feb. So it took just under three weeks.

My Self Assessment Summary then stated, that I was 'in credit £900', with my 'next payment of £100 being due by 31 Jul 26'. It further stated that I could leave the 'remaining' £800 in my account to go towards future payments or claim a refund. I elected to claim a refund, and when I got the refund page it allowed me to reclaim the full £900 of credit, hence I will still have a further £100 payment on account to make before 31 Jul 26. I will probably complete my 25/26 tax return before 31 Jul, hence hope to see the second payment on account reduce to an exact amount to settle my account. (My total income tax due for TY25/26 should be well under £200).

Anyway, I suppose the moral of this story is not to leave an application to reduce payments on account to the last minute. If I need to apply again I will do so at the end of December.

(My wife's application and processing followed exactly the same timetable, so the 3 week processing time was not just a 'one off' anomaly on my tax account)

BreakingGlass

Finally to follow up on the above to give an idea of HMRC repayment timelines: I applied for the above refund on 11 Feb and it was paid to my bank account today, 20 Feb. My wife's refund timeline was identical.