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Posted Sat, 08 Oct 2022 09:05:08 GMT by Pat15
Please forgive my basic (and obviously very incomplete) knowledge of this subject, posting here was a last resort as I can't find an answer elsewhere. My primary concern is that on the face of it someone paying tax through Self Assessment appears to be paying 50% more to HMRC over a given 12 month period (excluding the first couple of years of self employment) than someone with the same earnings paying PAYE over the same 12 month period; one balancing payment of 50% and one payment on account of 50% on January 31st followed by a second payment on account of 50% on July 31st for the self employed person. I'm aware of the payment in arrears issues with Self Assessment. I would be delighted if someone could explain that I'm missing something here. Many thanks in advance, Pat
Posted Thu, 13 Oct 2022 13:54:49 GMT by HMRC Admin 20
Hi Pat15,

Payments on account are only created when the two criteria below are met.  They are:-
1 - your last self assessment bill was more than £1000.00
2 - less than 80% of your tax laibility was collected automatically, eg. though paye empolyment

Where both criteria are met, payments on account (POA's) are created for the next tax year.  They allow you to pay approximately half of the next years tax liability at 31 July and the other half the next 31 January.  

There is guidance available on POA's at Understand your Self Assessment tax bill.

Thank you.

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