HMRC - aren't they great!
Discussion
In tax years 23/24 and 24/25 I was receiving rental income. As a result, I had to make payments on account - i.e. pay half the expected tax in January before I'd even completed the tax return in April.
I received my last rent payment in March 2025 - since i would not receive rent for 25 / 26 I updated the estimated income for that year. The app told me that my payment on account would therefore be 0 in January 2026. All good.
Last week I submitted a tax return - bit of interest on savings. Nothing much - most is in an ISA.
And this week I find out......... that I should have paid half of my tax bill in January (and because I didn't, I have an overdue payment and have to pay interest), and have to pay the other half by end of July. Because I'm still paying "on account".
So although I was told I owed nothing in January - had no bill, and was not chased for payment - I now have to pay interest for not paying a bill I didn't have.
I asked what would happen next year. I was told that currently, it shows that there is nothing to pay on account in Jan 27.
I said : That's what it said last year for Jan 26 - and now, because I completed a tax return it's decided I should have paid in January and fined me. What's to stop the same thing happening next year - I pay nothing in January, and when I complete a tax return in May it decides I should have paid an unknown amount in January and fines me again?
"It probably won't".
Great.
I received my last rent payment in March 2025 - since i would not receive rent for 25 / 26 I updated the estimated income for that year. The app told me that my payment on account would therefore be 0 in January 2026. All good.
Last week I submitted a tax return - bit of interest on savings. Nothing much - most is in an ISA.
And this week I find out......... that I should have paid half of my tax bill in January (and because I didn't, I have an overdue payment and have to pay interest), and have to pay the other half by end of July. Because I'm still paying "on account".
So although I was told I owed nothing in January - had no bill, and was not chased for payment - I now have to pay interest for not paying a bill I didn't have.
I asked what would happen next year. I was told that currently, it shows that there is nothing to pay on account in Jan 27.
I said : That's what it said last year for Jan 26 - and now, because I completed a tax return it's decided I should have paid in January and fined me. What's to stop the same thing happening next year - I pay nothing in January, and when I complete a tax return in May it decides I should have paid an unknown amount in January and fines me again?
"It probably won't".
Great.
kiethton said:
Appeal it, they'll normally waive the penalty (or did for me)
Same here. I got a fine for not doing my self assessment on time, and once it's however many weeks overdue they start increasing the fine every day so it was up to several hundred quid by the time I realised. I phoned them up, and after I'd forwarded the e-mail they'd sent me the year before saying I no longer needed to self assess they cleared the fine. On the odd occasion I've needed to phone them up over the years they've been pretty helpful.They chance it because they know a large % of people will just shrug and say oh well.
You would think someone like HMRC would act in the best interests of the people but in reality they pull stunts like this all the time.
I am 100% convinced there are people in HMRC who work on commission!!
You would think someone like HMRC would act in the best interests of the people but in reality they pull stunts like this all the time.
I am 100% convinced there are people in HMRC who work on commission!!
alscar said:
Supposedly as soon as you owe more than £1k in tax ( usually iro savings interest ) and are already on SA then 2 payments a year in advance are standard.
I know - but I don't. What I owe is less than half that. In fact, I did point that out to her. She said "I've known people who had to pay on account for less than you owe".
She basically thought it was a carry over from having to pay on account in previous years, and the system still thought I should be paying on account based on my previous tax return (which is when it works it out). Hence - although I owed nothing in January - based on my previous return for 24/25 I was still "on account" so was instantly in arrears when I did this years return.
So her belief is that - because what I owe in this tax return is less than the threshold for payment on account - the system will not expect me to pay on account in January next year, so won't fine me when I submit a tax return in April.
It matters - because although the interest is just a few £ this year - it is likely I will start receiving rent again around Autumn this year. Which means that if it does the same thing next year, the interest will be significantly more.
Edited by davek_964 on Tuesday 19th May 16:26
Gassing Station | Finance | Top of Page | What's New | My Stuff