Varying SATR payments on account?

[d000hg]

I've already put this to my accountant by email but I seem to recall you have some ability to change your payment on account if you have good reason to expect your income to change since the previous year. Is this correct and how does it work if so?

[Patrick@Intouch]

I've already put this to my accountant by email but I seem to recall you have some ability to change your payment on account if you have good reason to expect your income to change since the previous year. Is this correct and how does it work if so?

You can reduce your payments on account if you think that your income is likely to be lower in the 2019/20 tax year than it was in the 2018/19 tax year.

Should you get it wrong though and your income exceeds what you projected, any tax liability not covered by the reduced payments on account will attract interest from HMRC.

Your accountant can claim to reduce your POA's through your tax return or through the Government Gateway.

[Paralytic]

You can reduce your payments on account if you think that your income is likely to be lower in the 2019/20 tax year than it was in the 2018/19 tax year.

Should you get it wrong though and your income exceeds what you projected, any tax liability not covered by the reduced payments on account will attract interest from HMRC.

Is it also the case that if the actual income is less than the projection, we earn interest on the difference? I'm sure that happened to me a few years ago and will leave my artificially high if it means I'd earn more than I'd get via a savings account

Your accountant can claim to reduce your POA's through your tax return or through the Government Gateway.

You can also do it yourself via SATR - the option is there once you've completed all the return details but before you submit it.

[ladymuck]

You can do it yourself by logging into your tax account.

As Patrick says, you need to make sure you don't reduce it too much or else you'll incur interest. My first accountant advised me to always reduce them to zero which I swiftly discovered was bad advice indeed. The interest wasn't onerous but it was annoying when I realised that it's not optional to pay in two instalments.

[Patrick@Intouch]

Is it also the case that if the actual income is less than the projection, we earn interest on the difference? I'm sure that happened to me a few years ago and will leave my artificially high if it means I'd earn more than I'd get via a savings account

Yes, if you've paid more than you end up owing through payments on account then HMRC should apply interest and add that to any repayment.

[Paralytic]

Yes, if you've paid more than you end up owing through payments on account then HMRC should apply interest and add that to any repayment.

Any idea what interest rate they use? Could be better than most savings account, even 1 year notice ones.

[chrisl]

Interest

Any idea what interest rate they use? Could be better than most savings account, even 1 year notice ones.

late payment interest rate - 3.25% from 21 August 2018
repayment interest rate - 0.5% from 29 September 2009

[d000hg]

You can do it yourself by logging into your tax account.

Government Gateway? I lost my ID and cannot face the rigmarole of getting it sorted out but great to know. I'll ask the accountant if I wish to change it - Since it's already January I have a pretty good idea on how the 2019/20 year will compare with 2018/19 to avoid making glaring over/under-estimations.