Income Tax Payment on Account

IOWJJBTM2025

My 86 year old Mum receives an uprated state Pension. I do not know the full detail but when my dad passed 20 years ago he had paid extra in or something and she inherited it. Anyway instead of the basic state pension of £12K she gets a state pension of approx. £20K.

Every year we do her self assessment for her and also pay the tax for her. The tax amount has increased every year but this year is the first time where the tax bill exceeded £1,000. This year we paid income tax of £1,200 just before 31st January.

She forwarded me an email yesterday had an email stating that she has a message on her Tax Account. I logged onto her tax account and found the message below. Understand that from her account she also has to pay another £636.38 by 31st July.

From looking on her Tax account it states :-

You’re making payments on account because you have to make advance payments towards your tax bill for 2025 to 2026.

Only three weeks ago I paid £1200 tax for her for 24-25 tax year and now they want another £600 towards 25-26 tax year. If I don't pay by 2nd March they will add interest of £32.

Maybe I have had my head in the sand but is this something new, and can we just keep paying the tax for the previous year once a year as we have done for the past 10 years.

molerat

Once SA tax is above £1000 you need to make payments on account. https://www.gov.uk/understand-self-assessment-bill/payments-on-account

tfhnota

Back in the day, the self-employed could delay paying for a couple of years and interest rates were so high that it almost paid the tax. Happy days, these days they always take upfront even if it is obvious that you should not be paying tax and you have the appropriate tax code - for SIPP draw-downs for example. Get it back eventually and go on a "spending spree". Does give me an incentive to do my tax return pronto. Worth knowing, going forward, that they will want the money almost before you have got it, as was planning some serious SIPP drawdowns in the next tax year.

happyretiree

I always have to pay in January and July.

molerat

https://forums.moneysavingexpert.com/discussion/comment/81882845#Comment_81882845

Payment on account is not taking payments in advance, it is taking payment against a deferred tax bill so is likely against income already received unlike PAYE that takes payments directly as earned. If you have a tax code against a SIPP tax is taken in accordance with the PAYE rules the same as the majority of other incomes. HMRC have no knowledge of how much you will be drawing in the tax year and so it is not "obvious that you should not be paying tax". It is the responsibility of the tax payer to understand the rules and pay the correct amount of tax, knowing how it works can save a lot of unnecessary moaning !

Scot_39

Not new.

Paid them on off in past for more complex earnings record. I expect to maybe even trigger threshold when file my 25/26 returns.

They are basically designed to stop you paying any significant regular unpaid tax due very late.

Smaller amounts they allow upto 9m after end of tax year - by Jan filing deadline - guess what you are used to to date - like paying say tax due for all of 24/25 by Jan 26,.

Large amounts they take 2 bites - on the presumption this years taxes same as last. So now also want first half of 25-26, if you like Apr to Nov 25 incomes due taxes as well as old 24/25 tax year you already paid.

With many they tend to adjust tax codes - but state pension (at least the core) is paid tax free - so potentially not an option for your mum.

Once it settles down - as hmrc link example - you just end up paying half the due amount every 6m.

The first year when pay both last and half this years underpaid tax - the kicker.

But its all after the earnings - pension - have been paid.

If the income (or secondary income tax adjusted via tax codes) was taxed at source they would already have the money they are now asking for for current 6m period.

Its payment on account - not payment in advance (yes we know its earlier than your used to).

Normally hmrc gives advance warning - evenbwhen tbey had to cross check foreign returns forvequalisation - ive had full calcs and notivexcahesd of due dates.

IOWJJBTM2025

Thanks for comments - After reading up on it it is just going to be an expensive year because she got an increase on the state pension and at the same time the tax free allowance has been frozen. This has taken her over the £1000 tax threshold.

Mums Income tax payments over the last few years.

2014 £620

2015 £980

2016 £2400 (Jan'26 £1200 + Jan'26 £600 + Jul'26 £600)

2017 £1600 (best guess tax will be Jan'27 £200 + Jan'27 £700 + Jul'27 £700)

HMRC state "Pay on account helps spread the cost of your tax by making payments in 2 instalments"

Thanks HMRC - this is so thoughtful of you - the year you change over to 'payment on account' the person just has to tighten their belt.

Just to confirm - Mums only income is her state pension and HMRC know exactly how much she gets - the pension amount is auto completed on her self assessment.

I spoke to HMRC a few years ago and they told me that they cant take tax off State Pension at source - Any tax has to be paid via self assessment. They said that pensioners should employ an accountant to complete the self assessment for them and not have to rely upon un-qualified family members.

It would be a lot easier if HMRC did take tax at source. I wonder if they will do this moving forwards. In 2027 the basic state pension will go over the single persons tax free allowance. They would have to say - we are giving you 4.8% raise again, but taking 1% back for income tax so that every pensioner does not have to complete self assessment.

I now have just discovered a new problem - I have always been able to sign into Mums tax account and it sends my mobile phone a code to log in. This morning I now have limited access and they are asking for verification. They want a passport or driving license and a smart phone. Mum has none of these. I live 200 miles from her and need to go and see her to try and sort it out. My Mum has previously given consent for me to talk to HMRC but anticipate this may have expired.

Scot_39

when logged in Tues night to check new tax codes - for 26/27 - hmrc were still offering old gateway and new "one" govuk login access.

https://www.tax.service.gov.uk/sign-in-to-hmrc-online-services/identity/sign-in/oe8OmJO6mEj1IinbSkHkh6fkuvA7

are thry now making you register a "one" account even if use gateway ?

scotland now has aone account - even for things likd council green bin payments its annoying to many - worse for non techies like sister. And yes did need to get state verified id rerence numbers - my mum had none -even

My friend had to use that this year for either pasport or driving license. He was annoyed to put it mildly - and he had the id at hand.

Tax on pensions is a mare - but now full new looks set to be crossing personal allowance - it could become an issue worthy of changing - its not clear what if anything will come from Reeves promises. Some have said or at least speculated it will only apply to core and not serps/s2p payments etc.

Others find the month 1 basis with a full tax code annual pensiin adjustment difficult.

IOWJJBTM2025

https://forums.moneysavingexpert.com/discussion/comment/81883132#Comment_81883132

Hi Thanks for confirming. I can still sign into Mums account using Government Gateway. However I am now very restricted for what I can do now. I can see messages and pay bill. If I press on my details it then asks me to start verification process. Had no issues a few weeks ago when we did self assessment for her.

probate_slave

This sounds like a random identity check which the system throws up occasionally. If you try again in a few days you will likely be able to get in as before.

I was in the same position as you, submitting SA returns for my mother and paying the tax from her bank account under a financial LPA. HMRC don't allow impersonation but neither do they allow LPAs to submit SA returns. I didn't see any alternative, and never had a problem other than a single impossible ID check which vanished the following week.

Scot_39

https://forums.moneysavingexpert.com/discussion/comment/81883155#Comment_81883155

So guess we can all expect to go througn those hoops now.

it did allow me to change forecast incomes - to help correct - but still awaiting new codes - last time they got the changes wrong first time.

PS the late self assessment might explain the late demand for 1st payment on account.

You can file earlier and pay later.

Good luck sorting access.