Hello self-employed pals! Can I ask a question to anyone who deferred their July payment, as I did?
I'm being told to pay a laughably small amount this January, presumably because it's based on the idea that I payed in July. In which case, do I now need to pay the laughably small amount displayed on screen PLUS the July amount I was asked for?
Every year I'm asked to pay such a random amount, I have no idea what's going on.
I'm not sure as I paid July as I had it saved and I will pay what the accountant tells me to pay in Jan which I will now set myself a reminder for
I think I would pay the July amount though.
Do not walk behind me, for I may not lead. Do not walk ahead of me, for I may not follow. Do not walk beside me either, just fuck off and leave me alone.
This month should be the balancing payment for the full year. Normally you pay the first instalment in the January for the year to which it relates (so for the 19/20 tax year you would pay the first payment on account in January 2020). Then you pay the second payment on account in the July - this is the one that people deferred payment last July. Then you submit your tax return for 19/20 by the end of January 2021, and to the extent that you haven’t yet covered this by any payments on account made in Jan 20 and July 20, you need to make a final settlement as. “Balancing payment”. You also have to pay the first instalment for 2020/21 at the same time, which will be estimated based on 50% of the total liability from the preceding tax year.
I’ll have a quick look and see if there is any extension of the deferral but I suspect not.
Pretty sure you need to be paying your deferred payment now too (though my accountant does mine so I don't know about what displays on screen) - I have to pay mine at least.
This page doesn’t mention any extension of the deferral process. If you were supposed to pay in July and didn’t, you need to pay it this month instead as a catch up (plus the 20/21 first instalment as noted above).
Also, if you expect your taxable income to be significantly different for 20/21 compared to 19/20 you can request that the payments on account for 20/21, the first of which is due this month, are adjusted accordingly. I have gone from being self employed in 19/20 to being directly employed with tax taken via PAYE in 20/21, so I’ve asked for my payments on account to be reduced to nil for this year onwards.
I wish I had an accountant. Thank you for your responses - I'm totally lost, as you can imagine.
Does anyone do their taxes by logging on to the HMRC government gateway site? Because that's where it's telling me this very low sum:
Your balance
You owe VERY LOW SUM
Interest and penalties may be charged on all overdue amounts except the deferred July Self Assessment payment on account..
The payment due in July 2020 was entirely a Payment on Account towards 2019-2020, estimated based on your income for 2018-2019. You would have paid the first payment on account as part of your tax bill in Jan 2020.
If your income in 2019-2020 was lower than 2018-2019 (and you have now submitted your tax return for said 2019-2020) then you may not owe the full amount that was originally billed in July 2020 and thus you have a smaller bill now (And possibly no payment on account component for 2020-2021 if the bill of 19-20 is low enough)
In other words, if you HAD made the July payment, you would possibly now be getting a refund. So don't go rushing to pay what they said you owed in July 2020 in addition to what they say you owe now!!! Not if your income for 2019-20 is lower than 2018-2019.
If it's higher then you probably do need to pay this small amount plus July's deferred amount.
Last edited by Rebel Pebble on Tue Jan 19, 2021 2:46 pm, edited 1 time in total.
Rebel Pebble wrote: ↑Tue Jan 19, 2021 2:41 pm
If your income in 2019-2020 was lower than 2018-2019 (and you have now submitted your tax return for said 2019-2020) then you may not owe the full amount that was originally billed in July 2020 and thus you have a smaller bill now (And possibly no payment on account component for 2020-2021 if the bill of 19-20 is low enough)
YAY! Thank you Rebs. This is very much true, I earned 20% less in 2019-2020 because I took so much holiday (those were the days ). It looks like they have taken the value of the July payment they asked for out of MUCH bigger sums I have paid in previous Jans and Julys.
I have paid the very low sum on a debit card and will wait to see if it tells me that I still have a balance in 3 to 5 days, I think. Because surely that must be the official authority, no? If I log in and it says I'm good to go, I must surely be good to go.
I actually have my sister who is a trained accountant and has the patience of a SAINT but I am trying to deal with these things on my own (she says, asking a forum for help). Look how well that's going. When I look back at the quantities of tax I was paying in 2017/2018/2019 (eye-watering amounts), it makes sense that they managed to find my July payment in there. Or at least I hope they did. I believe they did and that's good enough for now, anyway.
Oh God, thanks H1ppy - I wish I could understand that, my eyes just swim. But I think that makes sense, given that I earned 20% less in 2019/2020 than in 2018/2019, and previously all the figures from other years have been more or less the same higher value.
It just seems like bingo/the opposite of the lottery, my payments in January. I thought I was going to have to pay about 4 times more than I actually have today. It is so incomprehensible to me!
I'm still surprised you'd be paying so little this period, though I suppose it depends where you are falling within the various rate bands.
Assuming any fluctuations would have been taxed at the same rate, if you'd earned 20% less in 2019/20 than in 2018/19 so that e.g. your tax liability went from £5,000 in 2018/19 to £4,000 in 2019/20, I'd expect you to have paid £2,500 in January 2020 (as a payment on account estimated based on half of the previous year's liability, as Rebs has said) then nothing in July because you deferred it, but then you'd still have to pay the remaining £1,500 of the revised calculated amount this month. You'd also need to pay the first payment on account for the current tax year, which, depending on your accountants, could be estimated at £2,000 based on your actual numbers from the tax return just submitted, or if you were expecting another fluctuation, could have been revised by them in whichever direction. Therefore either way I'm surprised that you are seeing such a difference.
Are you sure that your accountants have already submitted the 2019/20 tax return and it's been reflected on the website?
I don't have accountants, I submitted it myself last week and was given the balance to be paid when I logged in today. Ach, I might have to ring the bastards.
lazzbo wrote: ↑Tue Jan 19, 2021 3:39 pm
I don't have accountants, I submitted it myself last week and was given the balance to be paid when I logged in today. Ach, I might have to ring the bastards.
I'm beginning to think that's probably the best idea.
OK. It was quite quick to update the liability when I did mine last week so I think it's probably up to date in terms of the liability. Bear in mind that it takes a good few days for the balance to be updated for payments made so your recent payment may not be reflected yet.
It might be worth having a good look round your online account before you call as you might be able to answer your own questions and avoid the need.
When you sign in you should land on the Business Tax Summary page, then it tells you Your balance half way down on the right of the page. I think this is any existing outstanding balance, and would include the 2020/21 first payment on account due this month if not yet paid, but as I've changed mine to be £nil for this year I can't double check that.
At the bottom of the page there is also a section called Personal tax account. If you click on the link at the bottom of that box More details about your Self Assessment returns and payments then it takes you into your home page (this is where you can also check things like your NI record and so on).
The middle box at the top is called Self Assessment. If you click onto the link View your payments then it takes you into your self assessment account with HMRC. The default opens on Payments/credits received but you can change the view using the menu on the right to be Tax years (in which case you can filter to 2019/20 using the drop down) or Current position if you want an overall snapshot. Anything that has a link on can be drilled into (e.g. tax calculated, payments made for the year when looking by year) to give you the analysis.
It is worth you having a good look around here as you can hopefully get more comfortable with the amount that you have paid and make sure that you don't have any further amount due.
Also, if anyone else wants to adjust their payment on account downwards for 20/21 because of the way your income has changed, the link is on the right hand menu of the last page I described above. Whilst it used to be a legitimate tactic to overpay tax because you got something like 3% credit interest on any balance they had in hand on your account, that is no longer the case and there's no point in HMRC getting the benefit of holding your money till this time next year when it would be refunded through finalising your 20/21 tax return.
You are a mine of information, thanks so much, H1ppy! I am going to take a deep dive and look at all those sections you've mentioned. I'm really grateful for your help.
). It looks like they have taken the value of the July payment they asked for out of MUCH bigger sums I have paid in previous Jans and Julys.
I owe you a big ole beer, Rebs!