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Posted Wed, 12 Apr 2023 08:00:35 GMT by lorah187 Knight
Hi, I ended self employment in august last year. I completed my tax return at the weekend and paid my tax. I have let HMRC know that I am no longer self employed and have had confirmation of this. My understanding is that I am all up to date and that’s the end of it as I’m now taxed through my employer. I logged in today to see a message that I have a payment on account due in July. My understanding is that this is to help pay next years bill as I usually pay in April and then July. As I am no longer self employed, should this not be zero? I can pay it without issue now if that means that will be the end of it but it seems like a mistake? I have been told I can submit a claim to reduce payments but is this actually correct? The idea that I’m making a claim just feels like this will come back to bite me. I just want everything finalised. Any help would be great!
Posted Wed, 19 Apr 2023 08:39:47 GMT by HMRC Admin 5

Payments On Account (POA) are used as a way of collecting the bulk of the tax due in advance of the end of the tax year, with a balancing payment collecting the remainder.  

POA's are initially set at half the tax liability of the previous tax year and are fluid in nature.  If your profits go up, so do the POA's.  

When profits go down or no longer exist, POA's go down.  You need to work out if you still have anything to pay to payments on account.  

You can reduce POA's, by logging into your tax return and in view your calculation, select yes to reduce the POAs's and enter the figure to reduce them to.

Thank you.

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