- This topic has 2 replies, 2 voices, and was last updated 1 week, 5 days ago by
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- June 20, 2020 at 11:17 am
Hi Sir
I feel not confident on how to tackle questions re reducing payment on account amount, mainly because it was not covered in the Textbook or lectures in details.
For example, below is one question I came across when I did a mock exam:
Eva’s income tax liability and class 4 NIC for the tax year 2019/20 are £4840. Her income tax liability and class 4 NIC for the tax year 2018/19 were £6360.
What is the lowest amount to which Eva could make a claim to reduce each of her payments on account for the tax year 2019/20 without being charged interest?
Why the provided the solution is: £4840/2=2420?
Thanks.
June 20, 2020 at 4:45 pm£4,840 is the actual total tax liability for the the tax year 2019/20 – if the POA were any lower then tax would be underpaid for the year and therefore interest would be payable – as there are 2 POA the lowest amount is the calculation you show above!
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