A fair taxation system?

[ASB]

I did reduce the payment; but that is when she then said that I would be charged the interest I was banging on about above.

The situation only arises if you have income which is not fully taxed (i.e. other than PAYE). The tacit assumption is that the income accrues during the year and you receive it evenly, thus asking you pay half of it 10/12 of the way through the year is not entirely unreasonable.

I don't think this makes it unfair as such - but it is annoying and can make planning a bit difficult as you have discovered.

It's been this way for a number of years so I can only assume you have not been a higher rate taxpayer and receiving dividends until now.

[Ruprect]

The situation only arises if you have income which is not fully taxed (i.e. other than PAYE). The tacit assumption is that the income accrues during the year and you receive it evenly, thus asking you pay half of it 10/12 of the way through the year is not entirely unreasonable.

I don't think this makes it unfair as such - but it is annoying and can make planning a bit difficult as you have discovered.

It's been this way for a number of years so I can only assume you have not been a higher rate taxpayer and receiving dividends until now.

Correct - before I managed to keep it under the top rate. The amount you are asked to pay is still based on an estimate only though. I think it was a shock because all settlements I have made before have been made after the tax year in question when the figure has been calculated, not estimated. I still don't think it is reasonable to be asked to pay based only on an estimate, and then to charge interest at 2.5% ABOVE the BOE rate if you don't pay based on this estimate, but maybe you all like paying tax more than I do

[ASB]

Correct - before I managed to keep it under the top rate. The amount you are asked to pay is still based on an estimate only though. I think it was a shock because all settlements I have made before have been made after the tax year in question when the figure has been calculated, not estimated. I still don't think it is reasonable to be asked to pay based only on an estimate, and then to charge interest at 2.5% ABOVE the BOE rate if you don't pay based on this estimate, but maybe you all like paying tax more than I do

Of course you could always pay yourself a huge salary and you'd avoid the problem. I suppose the doubling of the tax/ni would be a bit of a shock though.

Now I'm a wage slave I'm paying PAYE on an estimate of what is expected to happen for the rest of the year, I have to start paying if from month 1. You get an extra 9 months grace to be reasonably sure of the position.

What bugs me more about the interest is it used to be the case that debit and repayment interest were at the same rate - i.e. it was theoretically neutral. Now if it turns out you have overpaid - due to unexpected changed circumstances the repayment interest is much less.

[Churchill]

I get my bonus paid this month. The tax man will be taking 40% - The bastard!

[ASB]

I get my bonus paid this month. The tax man will be taking 40% - The bastard!

I think I'd like a pet civil servant. The tax on my bonus usually pays for one

[Dow Jones]

Another way...

Find a 'deserving' asylum-seeker and just hand it over. Make sure you get a receipt. That way, you've done your duty and cut out the middle-man (HMRC)

[lilelvis2000]

The situation only arises if you have income which is not fully taxed (i.e. other than PAYE). The tacit assumption is that the income accrues during the year and you receive it evenly, thus asking you pay half of it 10/12 of the way through the year is not entirely unreasonable.

I don't think this makes it unfair as such - but it is annoying and can make planning a bit difficult as you have discovered.

It's been this way for a number of years so I can only assume you have not been a higher rate taxpayer and receiving dividends until now.

Sounds crap...at least in other countries it is installment-based with three installments and a balancing payment at the end. I had to do this once..my dad had to do it all the time...it only applied to self-employed people. But I can't recall anything about interest if you underpaid during the year...

[BoredBloke]

I bet if they had to refund you some money, if the estimate is an overestimate it's not refunded with an 8% addition to it.