Self Assessment - Payment on Account

[JayBM]

Morning all,

Hoping for some advice/reassurance.

Finally got round to completing my 12/13 return online today and had a bit of a shock when it came to the calculations section. For the 1st time ever there were payments on account due. These are a bit of a shock as my circumstances havent significantly changed in the last 3 yrs and this is the 1st time they've been added.

My SA for 12/13 showed tax of just under 2k owing, and therefore payment on account of just under 1k for January and July.

In July of 2013 I changed by job and took a pay cut as a result all my 2013/14 income will fall within the lower tax band (unlike this year where my PAYE was enough to put the rest in the higher band). As such my tax owed for 13/14 is likely to be under 1k.

On the SA I've asked for the payment on account to be reduced to 0, given the above reasoning. Is this likely to be accepted or do I need to get ready to pay the additional 1k by the 31st Jan.

Thanks in advance
James

[Eric Mc]

You are within your rights to apply to have the Payments on Account reduced to an appropriate level - Nil being allowed if you think your Self Assessment tax bill for the following tax year is going to be under £1,000.

There is space on the tax return to make this application. There is also a separate form called an SA303 which allows you to make the application to Reduce Payments on Account as a separate exercise.

I nearly always submit the SA303 AS WELL as the entries on the self assessment tax return because, in my experience, HMRC have a habit of ignoring applications to make reduced Payments on Account when the application is only made on the self assessment tax return itself.

If you reduce your Payments on Account and it turns out you shouldn't have, HMRC will charge you interest on the Payments on Account you DID'NT make and backdate the interest charges to the payment due dates of 31 January and 31 July.