Payment on account

[Contreras]

HMRC should pay 0.5% on the repayment. How much would would the £1800 earn sitting in your account instead?

Is the difference worth waiting in an HMRC call queue, making sense of it, additional filing, worry about penalties?

YMMV, but in many cases people would just suck it up and look forward to the repayment.

[Waldorf]

If you are certain you will have no additional tax to pay for 2015/16 then you can safely reduce your payments on account to zero.

If you get it wrong and do end up owing some tax, you will also owe interest from when they should have been paid on account. There is no fine that I'm aware of (though HMRC would probably take an interest in somebody who routinely abused this facility).

Agreed.

The PoA arises simply because HMRC assumes that your income will be the same in the following year. They have no idea what your income will be which is why, if you know your income will be lower, you can reduce or remove the PoA if you feel it will not be due.

[TheCyclingProgrammer]

If you are certain you will have no additional tax to pay for 2015/16 then you can safely reduce your payments on account to zero.

If you get it wrong and do end up owing some tax, you will also owe interest from when they should have been paid on account. There is no fine that I'm aware of (though HMRC would probably take an interest in somebody who routinely abused this facility).

[GoodBytes]

Asking on here does not make you safe. You get a second opinion from a bunch of contractors based on some very sketchy facts.

Well, a second opinion. The facts are not sketchy, that's all there is.

[jamesbrown]

Asking on here does not make you safe. You get a second opinion from a bunch of contractors based on some very sketchy facts.

Plus a few accountants...but they're all busy skiing on our monthly fees.

[northernladuk]

The problem I had when speaking with HMRC was trying to find out what could give rise to a payment on account for 2015-16 since the 2014-15 dividend was a one off. I'm pretty sure I am okay to just reduce the PoA to zero but I'm asking here to be safe.

Asking on here does not make you safe. You get a second opinion from a bunch of contractors based on some very sketchy facts.

[jamesbrown]

The problem is that I am not an accountant, and do not understand what gives rise to a PoA. I tried to find out from HMRC without success. I did manage to squeeze out of them that a permie job does not generate a PoA. For 2015-16 my only employment will be two consecutive permie roles since I am now changing jobs. There will be no contracts, and no company dividends. You have confirmed my beliefs. Thanks.

Oh, I see. Nothing you mention will give rise to a POA. The liability arises when you are self-assessed to income tax in the prior year and the liability exceeds a certain threshold.

[GoodBytes]

Not sure I follow. Only you know your income streams and whether self-assessment will be needed and a POA required. I believe the threshold is 1k in tax owed for a POA. If you've ceased trading, it's unlikely that you'd have a liability gong forward. Hence, you should be able to file an SA303 and reduce the POA to zero.

The problem is that I am not an accountant, and do not understand what gives rise to a PoA. I tried to find out from HMRC without success. I did manage to squeeze out of them that a permie job does not generate a PoA. For 2015-16 my only employment will be two consecutive permie roles since I am now changing jobs. There will be no contracts, and no company dividends. You have confirmed my beliefs. Thanks.

[jamesbrown]

The problem I had when speaking with HMRC was trying to find out what could give rise to a payment on account for 2015-16 since the 2014-15 dividend was a one off. I'm pretty sure I am okay to just reduce the PoA to zero but I'm asking here to be safe.

Not sure I follow. Only you know your income streams and whether self-assessment will be needed and a POA required. I believe the threshold is 1k in tax owed for a POA. If you've ceased trading, it's unlikely that you'd have a liability gong forward. Hence, you should be able to file an SA303 and reduce the POA to zero.

[GoodBytes]

The problem I had when speaking with HMRC was trying to find out what could give rise to a payment on account for 2015-16 since the 2014-15 dividend was a one off. I'm pretty sure I am okay to just reduce the PoA to zero but I'm asking here to be safe.

[jamesbrown]

Yes, you can reduce or eliminate them:

https://www.gov.uk/understand-self-a...nts-on-account

If you do so incorrectly, you will pay interest on the POA from when it should've been due (apparently not applicable in your case).

[GoodBytes]

I have filled in my tax return for 2014-15, which consists of a PAYE sum from a permie role, about £37,000, plus a dividend of ~£12,500 from my ltd company which ceased trading in July 2015 (PAYE was taken in the previous tax year). Anyway, the calculation says I owe £1,800 for the dividend, and then tries to charge me the same again as a payment on account due in two equal payments on 31 Jan and 31 July 2016. Having spoken with HMRC, this means they assume I will receive another identical dividend this year, which is not the case.

Do I just file the tax return, and say the payment on account is zero? When I rang HMRC they seemed to think there might still be a payment on account, for which I would be fined if I said it was zero. I tried to find out how a PoA could arise, but I find HMRC staff talk a dialect of English that is not easy to follow. They advised me to file the tax return, not say the PoA is zero, wait 3 days, then ring HMRC to examine my return and adjust the PoA as required. My concern is doing so might encourage them to take an extra close look at my return, and query the dividend, which would then be a real pain in the posterior.

I am tempted to file the return and say the PoA is zero since I will receive no dividends this year apart from ~£100 from a unit trust I hold. Is this wise?

Thanks