How to reduce payment on account?

[legocat]

I think I've left this too late but would be very grateful for some advice. I paid more tax than usual last year so have quite a hefty payment on account to pay at the end of this month, but I then earned much less than usual the year after. Is it too late to ask HMRC to reduce it? The amount is nearly half of my gross income!

Have you submitted the tax return? I would and them give them a call so they can see it’s true. I’ve always found them very helpful.

I haven't yet. Will need an accountant to do it for me as I don't know how to do mileage and phone calls etc.

That’s an expensive extra, I would just do it myself for a simple one. Mileage is x45p per mile. Phone calls- use an itemised phone bill.

If your expenses are below or around 1k you are as well just claiming the £1000 trading allowance and not bothering with mileage and calls etc!
When you submit your tax return (ie for 18-19) there is a box in it for asking to have your payment on account reduced for 19-20 (you need to explain why).
It sounds like you actually want to reduce your payment on account for 18-19, which is due shortly, in which case doing your tax return will also sort it, if you do it ASAP, as you won't have to pay more than you owe (eg if it turns out your tax bill is 2k, and you have already paid 1.5k on account in January, you will only have to pay 500 at the end of July, not 1500!). But you do need to get to it soon enough for them to adjust the bill, otherwise you will just have to pay it then wait for it to be refunded.

What is the £1000 trading allowance?!

Basically if you are self employed you can either deduct all your expenses, OR just deduct a £1000 trading allowance. Saves a lot of faff!!
If you have several self employed businesses you can split the 1k across them, you get 1k in total, not per business.
www.gov.uk/guidance/tax-free-allowances-on-property-and-trading-income

wow I didn't know that! Is there a gross income that you need to reach to deduct the 1k?

If the tax is for 18/19 no you can't reduce it because it's on earnings you have had, you are meant to save your tax money when you earned it.

That’s the point, her earning haven’t been as high so the tax bill won’t be as much as the payment on account being taken.

You can ring them up to reduce it, you can write to them and tell them or you can just not pay it (wouldn't really recommend this but it's and option).
If you just don't pay it they will chase you.
In any instance if the payment on account is reduced below what it should have been based on your actual tax due for the year then they will charge interest on the late paid amount.
If you have an accountant doing this for you then they should have already suggested it if last year's income was a one off high, and they can do it for you if you ask them to.
The get your 18/19 return done asap so you know what your actual position is.

Do your 2019 tax return now and get it submitted as this will correct your PoA. Or you can resubmit your 2018 return and tick the box to reduce your PoA.

I'm in the same position, op. I am self employed and usually earn the same amount each year and pay a bit of tax. Last year I earned a lot more - about a third more than a usually earn - and have to make a big payment on account for the current tax year. I know last year was a blip and I know the money will come back to me eventually but still. Annoying.

Yes, if you know that you’re earnings are less this financial year then you can reduce your POA. I don’t work in self-assessment so cant tell you how to actually do it, but HMRC’s website will have it on somewhere else just call HMRC’s general self-assessment line and they’ll explain.

Lot of tax nonsense being spouted on MN this morning. There’s no need to make a massive POA just because she hasn’t done a tax return yet.

Donkey - same applies to you, don’t intentionally over-pay if you know your actual liability will be lower

While you could resubmit the 17/18 return and reduce the poa that way I wouldn't suggest it as it would extend the enquiry window for that return.

@legocat re the 1k and a minimum income, no there isn't. It's the same 1k allowance that means you are not taxed if your entire self employed earnings are under 1k.
The link explains it, or if you google there are lots of accountants websites explaining too.

Thankyou all for your advice. I did pay an accountant to do my return last year, but they didn't suggest reducing POA. They were very crap and actually miscalculated and then had to do it again once I'd spotted their blatant error.
stucknoue - I paid a lot more tax in the previous year as a one off so the poa was higher than usual. I then had a lot of time off in the 18-19 tax year.