Self Assessment - Payments on account from last year

[S6PNJ]

I'm sure there is a simple explanation for this, though I can't see it at the moment. I've been completing my Self Assessment (and 'helping' my wife) for the last few years due to BTL income. This year (as in previous years) HMRC are 'inviting' me to make payments on account for the forthcoming tax year (to spread their income and stop me paying it all in one go at the end of Jan each year). I can follow their logic and can understand why they want me to spread the payments in 2 chunks. What I can't see is where, in this years tax return, they take account of the funds paid last June, in advance of this years completed (and hence correctly calculated) actual tax return figures. if I've already paid a lump of tax - where is this shown in the calculation or where do I need to enter it (and if so WHY do I need to enter it as HMRC know it has already been paid) on my Self Assessment forms?

Would anyone be so kind as to shine a torch for me and tell me where it is 'hidden' please?

[Eric Mc]

I would suggest using an accountant but everybody keeps saying they aren't really worth using as it's so easier and cheaper to do all this yourself.

Oh well.

[S6PNJ]

Thanks Eric I see Alucidnation's wit is rubbing off on you. I think you also forgot:

I'm seeing more and more people asking for free design accountancy work these days and it's really starting to piss me off.

Do you think I spent all these years learning my trade to do you free work? - NO

Do you think I spend a fortune employing talented, experienced designers accountants to do your free work? - NO

Do you think I spend a fortune on Macs and software to do your free work? - NO

Do you think I spend a fortune on rent, rates, insurances, tax etc to do your free work? - NO

Do you think we just push a few buttons on a Mac and out pops a fully formed, considered, researched, perfectly designed, scalable brand tax return that takes into account your product, service, market sector, target audience without even a brief? - NO

Design Accountancy is a skill that takes time to perfect not a worthless commodity so don't treat it like one. If something is worth having it's worth paying for.

(all said in jest, clearly, in case anyone needs a whoosh parrot!)
and for reference - see here

[egomeister]

Previous payments on account have no bearing on this years tax calc, but they will help define the amount owing at the end of Jan (ie, a combo of this years bill less tax already paid)

I find it a complete pain in the arse trying to keep track of where I am with the system, it was so much clearer when the return spat out a number and I just paid it.

[Eric Mc]

We've only had 25 years to get used to the Payment on Account system. It takes time.

[S6PNJ]

But I've not been filing Self Assessment accounts for 25 years so why should that be relevant to me? I'm filling in the details as per the HMRC website, all I'm asking for is anyone's explanation as to how it all works, not advice on how to submit my return.

[egomeister]

Eric Mc said:

We've only had 25 years to get used to the Payment on Account system. It takes time.

You'd think they might make it a bit more user friendly then wouldn't you? I manage to do all my bookkeeping just find and understand where every payment / liability comes from yet the payment on account is opaque in comparison.

It's not helped by there being a delay between you submitting info to the HMRC website and then it showing up on your account. SA, PAYE & VAT etc ends up sitting in no mans land for a couple of days before they will give you a figure for amount due. Just showing the figure straight away (even with a "Pending Confirmation" caveat) would be useful.

[subirg]

I might have got the wrong end of the stick, but statements of each years tax account are held on the hmrc portal and clearly show how much payment on account was made, and when, and what you owe gross and net of payments on account. Simples.

[S6PNJ]

subirg said:

I might have got the wrong end of the stick, but statements of each years tax account are held on the hmrc portal and clearly show how much payment on account was made, and when, and what you owe gross and net of payments on account. Simples.

Yes, I agree, I can log into my account and see for 2016-2017 that a payment was made on account. My tax calc for 2017-2018 doesn't say anywhere in the calculation anything like - Tax owed for 2017-2018 = £1234 less payment on account of £234 = tax owing of £1000, all it says is taxable income of £1234 so Tax due is £**** (numbers made up and are not genuine!)

In the 'Minus Tax Deducted' or 'Total Tax Deducted' I'd expect it to mention last years payment on account to show it has been taken into account, thus making it transparent as to how it has been calculated.

[anonymous-user]

S6PNJ said:

I can log into my account and see for 2016-2017 that a payment was made on account. My tax calc for 2017-2018 doesn't say anywhere....

Two different years.

[S6PNJ]

rockin said:

S6PNJ said:

I can log into my account and see for 2016-2017 that a payment was made on account. My tax calc for 2017-2018 doesn't say anywhere....

Two different years.

The payment on account, paid in June 2018 is for the 2017-2018 tax year as that is the return I'm currently doing, so it should show on the calc somewhere shouldn't it? This is the confusing thing as it is not transparent as to how the tax has been calculated. Maybe in my post above I got the wrong date range (I wasn't logged in to HMRC when I posted so was going from memory) but dates in this post are correct. I made a payment on account for this tax year being 'returned'.

[Stella Tortoise]

You have to submit the assessment to see the payments on account and your final bill.

Eric Mc knows this but chooses not to help.

[S6PNJ]

Ah, so as I've not yet submitted the return (all done bar pressing submit, sat at 90% complete I think), when I do it should show that I've already paid some of it (last June's payment) and my actual bill to be pay will be the tax owing (the figure I currently see calculated) less the amount already paid on account?

[Stella Tortoise]

S6PNJ said:

Ah, so as I've not yet submitted the return (all done bar pressing submit, sat at 90% complete I think), when I do it should show that I've already paid some of it (last June's payment) and my actual bill to be pay will be the tax owing (the figure I currently see calculated) less the amount already paid on account?

Correct.

If you are unhappy with your calcs you have a year to amend them.

[anonymous-user]

Eric Mc said:

I would suggest using an accountant....

Fair comment. Or at least, if someone chooses to DIY it makes a lot of sense to get stuff done in good time rather than leaving it to the last minute. If the return is done in good time you have plenty of time to understand HMRC's tax calculation and prepare for any tax that's due 31 Jan.

[DoubleSix]

I’ve always found the HMRC’s helplines are well staffed and pleasant to deal with OP, just in case you should get stuck at any future point.

[Sir Bagalot]

DoubleSix said:

I’ve always found the HMRC’s helplines are well staffed and pleasant to deal with OP, just in case you should get stuck at any future point.

^^This

Lady B wasn't impressed with the tax calc neither. Worry not I said, you don't actually owe that as it hasn't taken into account the payment on accounr you made last Jan and July. Huh she replied..... Well once the cogs start moving in the great IT system that HMRC have it will realise you've (read me) have submitted your return and work out what you actually owe (tax due this year minus two on account payments), give it a few days and it will work it out.

A few days later it did exactly that.

fk knows what will happen when we go digital

[Eric Mc]

Stella Tortoise said:

You have to submit the assessment to see the payments on account and your final bill.

Eric Mc knows this but chooses not to help.

In actual fact, I didn't know that. The reason is because I never use HMRC's own on line filing system as I use an integrated software package specially design for accountants in practice which works things in a different way.

When I calculate tax liabilities for my clients, I explain in the letter or e-mail accompanying the completed tax return what the overall liability for the tax year is, what is left to pay in January regarding that liability (if there is any balance due) and what Payments on Account are required for the next tax year. I will also suggest reducing the Payments on Account if that is an option and will actually calculate the reduced Payments on Account if possible.

[gazza5]

There is also a help sheet with the tax return notes that you can print out and it will also help you in calculating how much tax is due by taking into account your payments on account made.

You have to input the figures and use a calculator, and work out the sum yourself.

Unfortunately like Eric, we use a specific tax package (TaxCalc) - to file all our returns as its a lot simpler than using HMRC website so even though accountants may seem unhelpful we have our own tools for the trade (software written for us).