Self-assessment - assuming I will take same dividend in 2024 - 2025

[UKSBD]

Just completing my self-assesment

I took a dividend in 2023 -2024

After completing the assesment it appears they assume I will take the same dividend in 2025 - 2025

Despite ticking the "if you’re claiming to reduce your 2024–25 payments on account" (box 10 of calculation summary) and entering the extra amount of tax they assume I need to pay for 1st half of 2024 - 2025, that amount is still shown on what I have to pay before January 2025 rather than the amount I actually have to pay.

Is this adjusted after they receive the return and see the reason why box 10 is ticked, or will I have to pay it then claim it back?

Note: I ticked the box saying I don't want them to adjust my tax code

 

[Joyous]

Despite ticking the "if you’re claiming to reduce your 2024–25 payments on account" (box 10 of calculation summary) and entering the extra amount of tax they assume I need to pay for 1st half of 2024 - 2025, that amount is still shown on what I have to pay before January 2025 rather than the amount I actually have to pay.

Not sure if I'm understanding you correctly but when making the election you're supposed to populate the box with the reduced amount that you want your payments on account to be.

 

[UKSBD]

Not sure if I'm understanding you correctly but when making the election you're supposed to populate the box with the reduced amount that you want your payments on account to be.

thanks, I assumed that initially and entered 0.00 in it but it showed the amount as being owed in the final calculation.

I then edited it and entered the amount it said was due in 1st half of year and it still shows as being owed in final calculation.

If I enter 0.00 will it be adjusted after it is returned and they have seen the reason why?

 

[Joyous]

So box 11 is not showing the reduced payments on account?

Have you written the reason for the election in box 17? I vaguely remember something about some software not accepting it until you've completed that box.

 

[Newchodge]

I thought the payment in advance for self assessment was for self employed profits, not dividends? I could, of course, be entirely wrong.

 

[Joyous]

I thought the payment in advance for self assessment was for self employed profits, not dividends? I could, of course, be entirely wrong.

It covers profits and other income.

 

[UKSBD]

So box 11 is not showing the reduced payments on account?

Have you written the reason for the election in box 17? I vaguely remember something about some software not accepting it until you've completed that box.

I entered 0.00 in box 11

Then in the box that asks the reason why, I entered "I will not be talking a dividend in 2024- 2025"

In the "First payment on account for 2024-25" section of the summary it still had an amount assuming I would be taking same dividend.

I then changed the figure in box 11 to the approx overpayment result, but still got the same result in the summary.

I'm assuming, the return doesn't take it in to consideration until someone confirms it after reading the reason - does that make sense?

 

[UKSBD]

It covers profits and other income.

Is that new?
I've only ever made one payment previously, usually just after filing the return

 

[Joyous]

I'm assuming, the return doesn't take it in to consideration until someone confirms it after reading the reason - does that make sense?

It makes sense but it shouldn't be the case. Once you make the election it should automatically reduce the payments on account. What software are you using?

 

[Joyous]

Is that new?
I've only ever made one payment previously, usually just after filing the return

Nope. I've made the election for reduced dividends before.

 

[UKSBD]

It makes sense but it shouldn't be the case. Once you make the election it should automatically reduce the payments on account. What software are you using?

Just filing it Online on the .gov.uk website

It covers profits and other income.

Does that mean everyone who takes a dividend has to pay their 2023 - 20024 tax, plus their 1st 6 month of 2024 -2025 before 31/01/2025 ?

 

[Joyous]

You make payments on account if your tax bill is over £1,000 and less than 80% of it is deducted at source - typically PAYE. It's not because you've taken a dividend.

 

[UKSBD]

So in effect if people take dividends in March, they could effectively be paying tax on half of it before they even receive it?

 

[UKSBD]

So in effect if people take dividends in March, they could effectively be paying tax on half of it before they even receive it?

Just read up about it.

So it only really effects people in my circumstances, where your income the previous year was a lot larger than the current year.

Which is why I assume they have the box 10 section in the calculation summary.

I'll wait a few days to see if what I entered adjusts the figure, if not, I will edit it

 

[Martin Patfield]

Yes, it's really annoying.

I'm employed PAYE, and self employed for other work. Last year I barely worked self employed and yet they were still asking for a hefty on account payment which I rejected. Finally got my accountant to sort it all out last month and it's all back to "normal" now until this year when my self employed income/profits will be higher again.

 

[TheSkyisGray]

I wouldn’t file an amended return. If the payments on account are still showing then reduce the payments through your online account. But wait until you are sure because interest applies if it turns out they fell due.

 

[MyAccountantOnline]

You may be best to give HMRC a call. Be prepared for a VERY long wait on hold but once you get through it should be easily sorted.

 

[MikeJ]

Theoretically (in fact, this is exactly what we did...) you can take a dividend as soon as the tax year starts. You then don't need to pay tax on that dividend for 21 months. Receive the dividend on 5th April 2024, and pay the 24-25 tax in January 2026. That's why they ask for payments on account. We did this for at least 10 years.

If you say you're not going to get a dividend, and then subsequently declare one on your tax return, don't be surprised if they charge you a penalty and interest.

 

[Argentum Tax]

Receive the dividend on 5th April 2024, and pay the 24-25 tax in January 2026. That's why they ask for payments on account. We did this for at least 10 years.

If the dividend was paid on 5th April 2024 then this will have been taxable in the 2023/24 tax year, not 2024/25 unfortunately.

 

[UKSBD]

Amending it worked fine.

First payment on account for 2024-25 now shows as £0.00 and the amount I have to pay on 31st January is just the amount due for 2023-24

 

[DontAsk]

If you say you're not going to get a dividend, and then subsequently declare one on your tax return, don't be surprised if they charge you a penalty and interest.

Why would they do that?

Lets say you complete 23-24 return, with lots of tax owing. You could request to reduce your payment on account for 24-25 in anticipation of it being a bad year. For some reason it turns out to be a really good year, but then make a lot more profit than expected.

It just feeds into your next tax return.

 

[Bobbo]

Theoretically (in fact, this is exactly what we did...) you can take a dividend as soon as the tax year starts. You then don't need to pay tax on that dividend for 21 months. Receive the dividend on 5th April 2024, and pay the 24-25 tax in January 2026. That's why they ask for payments on account. We did this for at least 10 years.

If you say you're not going to get a dividend, and then subsequently declare one on your tax return, don't be surprised if they charge you a penalty and interest.

Hopefully you mean the 6th April!

If you do mean the 5th then you potentially got ten years of tax returns wrong

 

[DWS]

Why would they do that?

Lets say you complete 23-24 return, with lots of tax owing. You could request to reduce your payment on account for 24-25 in anticipation of it being a bad year. For some reason it turns out to be a really good year, but then make a lot more profit than expected.

It just feeds into your next tax return.

Because that’s how it works, if you reduce your POA and then it turns out you have tax owed above the thresholds then you will be charged interest until these are paid, otherwise what’s the point everyone would just reduce their POA to nil and sort it out on their next tax return.

 

[MikeJ]

Hopefully you mean the 6th April!

If you do mean the 5th then you potentially got ten years of tax returns wrong

Benefit of being retired for a while, I couldn't recall if the 5th was the first or last day of the tax year, and I couldn't be bothered to check.