Thank you for contacting me about Self-Assessment 'Payments on Account' (POAs).
HM Revenue and Customs (HMRC) currently has no plans to publicly consult on the policy and legislation regarding Self-Assessment POAs.
Self-Assessment POAs have been a feature of Self Assessment since its introduction in 1996. They are legally due and, despite their name, are not payable before income has been earned. There are two equal POAs six months apart. The first is payable on 31 January, 10 months after the beginning of the tax year to which it relates. The second is payable on the following 31 July, four months after the tax year ends.
POAs create a flow of revenue to the Treasury to fund public services. They also provide a structured method for Self-Assessment taxpayers to spread the cost of their tax bill. This ensures that the majority do not have to pay their tax liability in a single lump sum. They also limit any advantage gained by Self-Assessment taxpayers compared to other taxpayers, such as employees whose tax is deducted at source.
The amount of the POAs is based on the amount of tax due for the previous year. However, where circumstances have changed, taxpayers can ask HMRC to reduce those POAs, for example where they believe they will have no tax to pay for the current year or all of the tax due for the year is deducted directly at source. Information on how to reduce POAs can be found here: www.gov.uk/understand-self-assessment-bill/payments-on-account.
HMRC offers extensive support to taxpayers who may be struggling to make payments on time. Taxpayers can set up a Time to Pay arrangement if they have difficulty paying what they owe by the due date. This service allows taxpayers to set up an instalment arrangement to pay off their tax bill. In some cases, they can do this online without needing to contact HMRC. Information on Time to Pay arrangements is available at:
www.gov.uk/difficulties-paying-hmrc
A Budget Payment Plan is also available to help taxpayers budget by making regular advance monthly or weekly payments towards their next Self-Assessment tax bill. Information can be found at:
www.gov.uk/pay-self-assessment-tax-bill/pay-weekly-monthly
Thank you again for taking the time to contact me.