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Original poster

"Money on account" HMRC question

78 replies

summerlovingvibes · 05/02/2025 21:49

Please can someone very simply explain this to me.

DH and I do a self assessment tax return each year.

I don't have to put anything on account as don't have a big enough bill. Used to but my income has dropped as now only work PT.

DH puts thousands on account every year. Towards the next tax year. But where does this money go?? I just don't understand it!

Last year he paid his 4k tax bill and then had to put another 4k on account for this year. This year his tax bill is 4k and it asks for that amount... plus more for on account for next year.

So where is the money on account from last year? Why don't they just automatically do a calculation to take in account what you have already paid?

It's such a ridiculous system!

It just rolls on every year but I'd like to know where all the supposed "money on account" goes!

OP posts:

Sofrustratedwithmyself · 06/02/2025 15:41

mitogoshigg · 06/02/2025 07:39

You can actually submit you self assessment form any time after the 6th April, waiting until January means you owe "on account" for this year too. I submit mine as soon as I get my p60 from my other job.

All "on account" is, is paying approximately for this year, 24/25 tax, something that those of us on paye do each month.

This is the answer that makes the most sense to me! I hadn’t realised this

BestDIL · 06/02/2025 15:57

GreyFleece · 05/02/2025 22:20

If he had a tax liability outstanding of £4k at 31/01/25 this is after payments on account. I.e the full tax bill for 2023/24 was £8k, he’s made payments on account of £4k so £4k left to pay for 2023/24. Plus POA for 2024/25.

Yes, this is the correct answer. I have to do the same. It means than when he finishes work, his final bill will be half paid.

I use software called FreeAgent which comes free with either a NatWest business account or with a Mettle (a subsidiary of NatWest) account. It's brilliant! I have 4 income streams - 3 self employed and 1 employed. Confusing! It creates invoices etc for me and it will also file my tax return. I always complete my return in April so I know exactly what I will be paying the following January.

I also put aside the rough amount of Tax and NI each month so I'm not scrabbling around trying to find the money.

HMRC are bringing in MTD (Making Tax Digital) in, I think, 2026 so everyone will need to have approved software to file their tax return. It might be worth investigating if you don't have anything before April this year so that you are ready for MTD when it comes in.

I also understand that payments will switch to quarterly for some (depending on income) under MTD which should make budgeting easier.

MadeForThis · 06/02/2025 16:22

Just check your government gateway account now. You can log in from your phone.

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