Self Assessment, payment on account confusion

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I understand what payments on account are yet something bugs me. For the
2016-17 Tax Year I've made 2 payments:

• Jan 31 2018: £10,000 (Balancing payment £6,000 + First Payment on Account £4,000)
• July 31 2018: £4,000 (Second payment on account)

So I've already paid HMRC £8,000 for 2017-18 Tax Year (due on Jan 31 2019). I'm now in the process of doing my taxes for 2017-18 Tax Year.

When I view my calculation on the HMRC website I have a total amount due (ie Balancing payment) of £14,000 and a First Payment on account (for the 2018-19 Tax year) of £7,000. Which brings me to a payment of (a whooping) £21,000 due on Jan 31 2019.

There's a message on the page stating the following:

HM Revenue and Customs will add this amount to your Self Assessment statement of account. It doesn't include any 2017 to 2018 payments on account you may have made or any other amounts outstanding. To help you to decide how much, if anything, to pay by the due date, check your Self Assessment account and use the information above until it transfers over.

If I understand everything correctly, I should have a total bill of £21,000 - £8,000 due on Jan 31 2019. Is this right? At which stage are the initial £8,000 taken out of that total? Is it after I submit my return? Or do I have to say somewhere in my application that I've already made 2 payments on account for this particular tax year?

Many thanks to anyone who'll read this and take the time to shed some light on this!

 

[UK Contractor Accountant]

Or do I have to say somewhere in my application that I've already made 2 payments on account for this particular tax year

THE £8k paid on account will already be sitting in your online tax account so you do not need to worry about that.

Just file your 2018 Tax Return when ready and complete and your tax account will be updated automatically with the tax due on 31 Jan 19 = £13K as you correctly state. You will get an updated Statement of Account from HMRC around January 19 time showing the tax due.

Oh yes - did you decide to go Limited?

 

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THE £8k paid on account will already be sitting in your online tax account so you do not need to worry about that.

Just file your 2018 Tax Return when ready and complete and your tax account will be updated automatically with the tax due on 31 Jan 19 = £13K as you correctly state. You will get an updated Statement of Account from HMRC around January 19 time showing the tax due.

Oh yes - did you decide to go Limited?

Thanks, that's what I thought, but seems odd that HRMC can't do a 'live' update of your account and include an additional line of text in the calculation to take away what as already being paid in.

Yes! I'm going limited indeed, on day 1 of the next tax year to keep things nice and tidy!

 

[MyAccountantOnline]

Thanks, that's what I thought, but seems odd that HRMC can't do a 'live' update of your account and include an additional line of text in the calculation to take away what as already being paid in.

Yes! I'm going limited indeed, on day 1 of the next tax year to keep things nice and tidy!

If you will save tax by trading via a limited company (and with the tax figures you mentioned it was one of my first thoughts) I really wouldn't wait until 6 April next year. It doesn't really make anything any easier by delaying until a new tax year.

 

[SteveHa]

Thanks, that's what I thought, but seems odd that HRMC can't do a 'live' update of your account and include an additional line of text in the calculation to take away what as already being paid in.

That amused me. HMRC can't do anything "live". Hell, it takes around three weeks for a fully automated agent authorisation process to complete. "Real Time" information for payroll is only updated twice each month (hardly real time), and God help you if an actual person has to get involved, when the timescales go through the roof.