Self assessment - tax due in advance?

[Adviceplease123456]

Hello, I’ve been paye for ever but this past year did some adhoc work for someone throughout the last tax year. It was a one off project they needed help with.

im just submitting my self assessment and it’s asking me to also pay for next years tax - but I won’t be doing any self employment in the tax year 23/24 - so then they’ll just have a few £1000 of my money for a year?!

do I have to pay this? I’m thinking the extra money I earnt wasn’t really worth all this hassle if I’m now without £3k until Jan 2025 I’m assuming?

Think as long as you’ve paid 80% of your tax through PAYE then you can avoid paying in advance.

If you're sure you won't have any additional tax to pay next year, you can claim to reduce your payment on account.
https://www.google.com/url?sa=t&source=web&rct=j&opi=89978449&url=www.gov.uk/understand-self-assessment-bill/payments-on-account&ved=2ahUKEwjg7MXc0MiCAxV-_7sIHbv2AWYQFnoECAwQBQ&usg=AOvVaw2SqcI2GBsPO74iKrt_iUbv

You can ask for an adjustment. I can't remember how, but if you Google changing your payment on account amount I'm sure you will find it.

Yes, just write in the comments box that you haven't done any SE work this tax year and don't expect to in the rest of it so don't want to make a payment on account.

DP has done a complicated blend of SE, PAYE and Construction Industry Scheme work over the last 10 years so his tax has been all over the place and he's done this a couple of times and it was accepted without question.

You can reduce your payments on account either on the tax return or via the link on the bottom of this page

https://www.gov.uk/understand-self-assessment-bill/payments-on-account

It's just a way of ensuring that people who earn majority of income from SE can budget effectively year to year. In your case it doesn't apply so you can ask to have your payment on account reduced partially or completely.

However you don't usually need to pay POAs if your PAYE tax is 80% or higher of total tax due.

I had this and I’d had to take several months off due to an accident so I knew my following years tax would be lower as my earnings were over a quarter down.
They still made me pay half of the following year, but said that I would get a refund the following tax year. I actually had to take out a loan to pay it and get myself into debt, which frustrated me.

You were given incorrect advice. Not unusual for HMRC. But this is why it's a good idea to have an accountant as they can tell you the correct information. You can reduce payments on account or remove them totally if your income will be lower in the following tax year. The only issue is if you reduce them below what you should have paid in advance, you will have interest to pay and you may get a penalty. And if you're not sure, pay the first one and then submit your return before the July payment is due. Lastly, HMRC do allow you to set up a payment plan in most circumstances.

When DH went from self employed to employed he just reduced his payments on account to zero and explained why.

I did similar but knew I would still owe some tax as it didn’t tie up neatly with the tax year so reduced my payment on account to what I thought I would owe rather than the full amount.

it’s asking me to also pay for next years tax

there is a section where you can write this in and reduce the amount to £50

I had a similar request for tax in July this year based upon the tax year 2021/22 and explained my circumstances had changed blah blah so wouldn't be earning anywhere near as much and reduced the tax up front request - they accepted that and actually by the time July arrived and I went on to pay the small amount - they were giving me a tax refund

Thing is you know its a one of amount of work - but they don't and rather than you get into debt they ask for some up front

This annoys the he'll out of me. I'm SE and have to pay half the years tax before I've earnt it. I run a business, I'm perfectly capapable of budgeting and paying what I owe when I owe it.

I’m so frustrated that they made me go into debt to pay tax I would not even owe. I only earn 18k a year on a good year, and I lost 4 months earnings following an accident so my earnings for the next year were going to be massively down.

Before you've declared it yes, but you have actually already earnt it.

As @KateyCuckoo said, you have already earned it, which if you are budgeting and saving as you earn, shouldn't be an issue. It becomes a problem if you aren't saving tax each month or you've dipped into your tax savings which, unfortunately, we all need to do sometimes. I pay mine to HMRC each month so it's out of sight and temptation.

you just need to reduce your payments on account to NIL if you genuinely have NIL self employed income during the current year.

If you reduce them to NIL and then do have tax to pay, they will charge you interest.

also, if you weren't sure on if it was due, ie some income but not as much, if you are asked to make POA and you think your income will be less, then get your return done before the July 24 payment is due in case it is not required.