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Hello,
In 13/14 the Income tax liability was 9022
In 14/15 the income tax liability was 14427.
Now the question asksnto calculate payment in account and balancing payments after 1 january 2016.In 14/15 the two payments would be 31/1/15 and 31/7/15 but as the question asks for payments after 1/1/16 it will be the balancing payment for 14/15 and 1rst payment on account for 15/16 on 31/1/16.
Wouldn’t there be no balancing payment for 14/15 as the 1rst two payments would be equal to 9022? And on 31/1/16 there will be 1rst payment on account of 15/16 for half of the amount of the previous year liability (14427/2) 7213.5?Thanks
Not sure where you got this question from as it’s not a very well worded one!
Firstly you need the figures of income tax payable not the income tax liability to determine required payments!
On 31 January 2016 the balancing payment for 2014/15 would be required along with the first payment on account for 2015/16.
The payments on account for 2014/15 would as you state have been based on the income tax payable for 2013/14 – in total 9,022 BUT the 2014/15 payable figure is 14,427 so the balancing payment will be 14,427 – 9,022 NOT nil.
The first payment on account for 2015/16 will of course be half of the 2014/15 income tax payable.Sir, in this example, if the Tax liability for 13/14 was 14427 and tax liability for 14/15 was 9022, then there wont be a balancing payment.
Will the excess be paid by the HMRC? Or the excess amount will be deducted by the taxpayer from the payment to be made on 31 January?
The taxpayer may make a claim to reduce payments on account if there is reason to do so but if the payments on account exceed the amount payable for the year then HMRC will indeed repay to the taxpayer if agreed before final due date or the taxpayer may use it to settle the first payment on account due 31 January for the current tax year.
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