Self assessment 2014/15 (yes doing it early)

[Welshbeef]

I already have all the info so settled into completing it this am.


One issue I have is I'm due to pay a chunk on account but they are stating that I will also have to pay my first payment on account for 2015/16 by 31/1/2016. Now part of the reason I owe so much this year is due to the fact I was on tax code BR all year whereas it's now corrected for 2015/16. In addition very strong commission payment which may or may not be replicated or be of similar values or not.

So how do I not pay the 2015/16 payment on account - I'd want to pay any tax for 2015/16 on the 31/1/2017 not a year in advance.


Any ideas?

[Eric Mc]

Are you confident that you will have little or no tax to be paid under self assessment for tax year 2015/16?

If you are, you can apply to have the two 2015/16 Payments on Account reduced or cancelled altogether. You do this by ticking the appropriate box on the 2014/15 tax return. If you are reducing rather than cancelling altogether, you need to enter the amounts you are reducing the Payments on Account to.

If you estimate that the 2015/16 self assessment tax liability is going to be under £1.000, you can cancel the Payments on Account completely.
You are also excused Payments on Account if 80% or more of your overall tax liability is covered by tax already paid at source, such as through PAYE or tax deducted by banks on interest.

If you OVER reduce the Payments on Account, HMRC will charge you interest on the underpaid amounts when they eventually find out what the payments should have been.

Here is what HMRC says -

‘Payments on account’ are advance payments towards your tax bill (including Class 4 National Insurance if you’re self-employed).

You have to make 2 payments on account every year unless:

your last Self Assessment tax bill was less than £1,000

you’ve already paid more than 80% of all the tax you owe, eg through your tax code or because your bank has already deducted interest on your savings
Each payment is half your previous year’s tax bill. Payments are due by midnight on 31 January and 31 July.

If you still have tax to pay after you’ve made your payments on account, you must make a ‘balancing payment’ by midnight on 31 January next year.

[Welshbeef]

Ok so in theory I may have to pay the first instalment then quickly complete the return which will then mean no 2nd payment but also a refund of what has been paid in the 1st instalment.


Very annoying -

The key part is tax code BR for the full year and now on the correct tax code makes a massive difference.

[Jobbo]

How does tax code BR mean you owe more to HMRC?

[Welshbeef]

Jobbo said:

How does tax code BR mean you owe more to HMRC?

I'm a 40% tax payer - BR code is 20%.

So what the self assessment site is doing is assuming all else being equal I will have to pay the value over again next year but that will not be the case as now my tax code is corrected

[Jobbo]

Ah, I hadn't realised it applies to all your earnings - just assumed it was allocated to take away your personal allowance.

[Welshbeef]

Jobbo said:

Ah, I hadn't realised it applies to all your earnings - just assumed it was allocated to take away your personal allowance.

Nice to have when they made the error so the £ has been sat in offset all year and will remain until 31/1/16 .

[oyster]

Why not just to your tax return in late Jan next year and that automatically means you pay HMRC later?

And pocket the interest on the cash in the interim.

[Eric Mc]

Welshbeef said:

Ok so in theory I may have to pay the first instalment then quickly complete the return which will then mean no 2nd payment but also a refund of what has been paid in the 1st instalment.


Very annoying -

The key part is tax code BR for the full year and now on the correct tax code makes a massive difference.

No - if you think no Payment on Account is due - you don't need to pay it. However, if that is the case, you MUST apply to have the two Payments on Account reduced to Nil - otherwise HMRC will expect you to pay the automatically calculated amounts.

[Welshbeef]

Eric Mc said:

No - if you think no Payment on Account is due - you don't need to pay it. However, if that is the case, you MUST apply to have the two Payments on Account reduced to Nil - otherwise HMRC will expect you to pay the automatically calculated amounts.

Ok do I do that after the calculated value - or next step is submitting the return?

[Eric Mc]

You do it as part of the 14/15 return. However, do you have a good idea -

a) what your 2015/16 tax liability is going to be?

b) that 80% or more of it will be covered by PAYE?

c) that any tax due under Self Assessment will be less than £1,000?

[Welshbeef]

Eric Mc said:

You do it as part of the 14/15 return. However, do you have a good idea -

a) what your 2015/16 tax liability is going to be?

b) that 80% or more of it will be covered by PAYE?

c) that any tax due under Self Assessment will be less than £1,000?

I could get up to 60% bonus or zero payable in March next year (note let's take the last 5 years I've pretty much had full bonus each year).

My overseas properties have been performing poorly in the 2009-2013 but last tax year really picked up and so far looking at this year it's looking like the trend is continuing to go up.

[walm]

Welshbeef said:

I could get up to 60% bonus or zero payable in March next year (note let's take the last 5 years I've pretty much had full bonus each year).

My overseas properties have been performing poorly in the 2009-2013 but last tax year really picked up and so far looking at this year it's looking like the trend is continuing to go up.

Eric really helped me out on this one WB just FYI.

But since you have so many moving parts why not just file the 14/15 now and just adjust the PoA amounts when you have a much better idea what they will be in January next year?
There is only two months of 15/16 you don't know about at that point.