Income Tax Payment on Account

IOWJJBTM2025

https://forums.moneysavingexpert.com/discussion/comment/81883847#Comment_81883847

Hi all - thanks again for the comments, HMRC do write to my Mum and remind her to complete Self Assessment. Doing the self assessment was easy. In box 8 on the form the State Pension amount was already populated. HMRC know exactly how much she gets. When we did her self assessment in 2025 we worked out that the tax due in Jan'26 would be £1200 and told Mum to make sure she saves £100 per month for this. We messed up here because we were not aware that she would move to payment on account. We now know that Mum should have been saving £150 per month. to pay the additional £600 in Jan'26 towards the 25-26 tax year. She will be able to save up for the £600 on account tax bill in Jul'26 and subsequently the estimated tax bill of £800 in Jan'27.(needs to save £135 per month post July next year.

Mum previously had a hip replacement and has been on a waiting list for 2 years for the other hip. She is in a lot of pain and pretty much housebound now until she can get the operation. In December she bit the bullet and paid for a stair lift to be fitted because she was having to sleep on the settee downstairs.

Trying to explain Payment on Account to my Mum would be very difficult for her to understand. I will end up paying the unexpected additional £600 that is due now. I know she does not have spare money to pay. I feel responsible because I should have told her that she needed to save £150 per month last year to be able to pay £1800 in Jan'26.

I will call HMRC next week at 8am to talk to them about her tax being simple and therefore would be easier to not have to do self assessment. Just in case anybody is wondering - no she does not get any benefits. She only gets her state pension which is enhanced. Thanks again everyone.

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/81884273#Comment_81884273

If for any reason the end result is that she (you) continues to complete Self Assessment returns there are a couple of things you may find useful to know.

1. Payments the taxpayer makes are never part of the Self Assessment tax calculation. So if her tax liability for 2025/26 is say £1,400 it will be £1,400 that will be shown on the calculation, it won't be £200. But when her Self Assessment account is updated it would show a Balancing Payment of just £200 needed to be paid plus POA of £700 for 2026/27 (it takes a few days from submitting the return until her Self Assessment account is updated).

2. Looking at the explanation at the end of the tax calculation is useful but only if you understand that the tax she has paid is never ever factored in at that point.

IOWJJBTM2025

https://forums.moneysavingexpert.com/discussion/comment/81884294#Comment_81884294

Hi - thanks for this - makes perfect sense.

I just hope that anybody else who is approaching £1000 per year tax bill is now aware that they will move to payment on account from my lessons learned.

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/81884481#Comment_81884481

They can read about them on gov.uk and no doubt LITRG has a better explanation!

And to be fair to HMRC they would be on the explanation at the end of (online) tax calculation

dinosaur66

what i would do is leave say 2k in the hmrc account in balance credit and just top it up when a payment goes out so you know you always have it covered .

it is rediculous that hmrc now all online, having closed all offices are asking 80 year olds to fill out self assement returns because of freezing tax thresholds

and in 2028 MTD will ask them to do it 5 times a year when i think they are stopping the traditional self assment accounting method hmrc use altogether if you have 20k a year coming in.

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/81885117#Comment_81885117

That is of no relevance to the op though as their mum doesn't have any trading or rental income.

And totally ignores the fact that she doesn't need to file a return in the first place.

dinosaur66

she said she has filled out 10 years of hmrc self assement returns for her mother

and gets letters at short notice of payments due or having been missed

i would have thought if you fill out self assesment hmrc return and pay tax you can leave credit in your paying in account if you wish to.

i did not know this was only allowed for landlords and traders which admittedly i am both

DRS1

https://forums.moneysavingexpert.com/discussion/comment/81885130#Comment_81885130

I think it is the MTD comment which Dazed was picking up.

Personally I am not sure I would leave money in HMRC's account for any length of time. It will get no interest if it didn't need to be there.

dinosaur66

i agree i used to top mine up with my ebay takings once a month / did not look at it and then in april when i did my tax return hope there was enough to cover my yearly bill but interst rates were negligable until 2022

i still leave £1k in there as hmrc still send me usually 1 letter a year saying i owe some top up ammount although they never explain what its for

IOWJJBTM2025

https://forums.moneysavingexpert.com/discussion/comment/81884487#Comment_81884487

'And to be fair to HMRC they would be on the explanation at the end of (online) tax calculation'

This is the weird thing. When we completed the self assessment on 28th December it showed immediately the £1200 being due by 31st December. It also showed that there was a £600 payment due in July'26. We paid £1200 immediately from our own bank account using the links on the self assessment screens. We did not see anything on £600 being due now from memory.

On 12th Feb at 5.15pm Got the email saying You've got a message from HMRC. Sign into your account to view.

When I opened the account via the gateway on 13th Feb the message was found as per my original posting and it was evident that the first 'On Account' payment was overdue.

We are now in full knowledge thanks to all the help from the members on the forum of Mums tax liabilities and future payments that she will be ready for. She does get the money from her state pension, she just needs to give it to HMRC earlier and pay twice a year now.

I have now paid £600 and have scheduled in my calendar to pay the next £600 before the end of July.