POA for My First SA

Shylock_249

Hi,

I’ve had to complete SA for FY 24/25. I’ve entered the figures and proceeded through the wizard.

Having got to View Your Calculation and notice that HMRC says I owe £1937.oo but I know I have paid them £2045 for the same tax year. In my reckoning they owe me £108.oo. Understood.

But later on they ask me to make POA of half of the £1937 in two equal payments.

Then there is an option to Reduce POA and I can reduce it to NIL. Should I do that?

If I select NOT to reduce and HMRC rectify the figures saying they owe me the £108 will they cancel the POAs?

Is POA just HMRC using that system to recover some tax during the financial year rather than just once at the end of the FY, where with PAYE they would be collecting it monthly?

Thanks in Advance

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/6663347/poa-for-my-first-sa

Now that the 2025/26 tax year has ended you will presumably have a decent idea of the liability for that year.

It seems unlikely that cancelling them would be the correct option, but reducing them might be appropriate once you have an idea of your actual liability. And it doesn't matter why you owe tax for 2025/26, that is totally irrelevant for POA purposes.

POA are perfectly normal for people owing more than £1,000 on a Self Assessment calculation.

Shylock_249

Thanks, I haven't completed SA for 25/26 because I'm waiting for P60s from my 3 pension providers.

If HMRC has taken the correct tax from those pensions, taking into account the estimated (I actually gave HMRC the exact figure in 25/26 because all my taxable bank accounts had paid the interest in 1925) bank interest my balance should be near zero, so I'd be loathe to make Payments On Account of £1937 when the following years tax bill was nil if you see what I mean?

Back to my original post: "If I select NOT to reduce and HMRC rectify the figures saying they owe me the £108 will they cancel the POAs?"

Sorry, it's just lack of knowledge on my behalf, and I was born awkward.

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/81955787#Comment_81955787

No, the £108 has absolutely no relevance to the POA whatsoever.

How confident are you that you won't owe any tax at all for 2025/26?

If you reduce the POA to £0 and you owe say £50 then each POA will be reinstated to £25 and you would be charged interest (at a chunky rate) on any tax that is paid late.

Shylock_249

Thanks.

"How confident are you that you won't owe any tax at all for 2025/26?"

Considering it was done by PAYE I have NO confidence whatsoever! I'm unable to deduce if every time they raised a P2 that at the end of the FY they would have the correct figures. They never have been.

I'm probably better just paying it and suck it and see.

What happens if for instance they ask for 2k in two payments and at the end of the year I owe 4k?

I have to complete the 24/25 by 9 July.

Thanks again

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/81955979#Comment_81955979

If you mean £1k each POA (for 2025/26) and the actual liability is £4k then the POA would remain £1k each and you would have a Balancing Payment of £2k to pay by 31 January 2027.

And likely a POA of £2k to pay on 31 January 2027 for 2026/27 as well.

sheramber

https://forums.moneysavingexpert.com/discussion/6663347/poa-for-my-first-sa

Your £108 is tax overpaid for 24/25.

The payments on account are for 25/26 and are based on your tax payable for 24/25 which is £1937.

These POAs will only be recalculated when you submit your 25/26 return.

Alternatively, you can reduce them if you are sure you will not have to pay that amount. But if you reduce them too much then interest will be charged on late payment.

Shylock_249

https://forums.moneysavingexpert.com/discussion/comment/81956020#Comment_81956020

Thanks, that has helped me understand the system much better.

Thanks again.