SALF301 - Payment of Tax: Outline
SALF302 Introduction
Outline of the payment system
Example
SALF303 Payments on account
Payments on account are normally required if the
taxpayer was assessed to income tax in the preceding year
Section 59A(1)
Calculation of the payments on account takes tax
deducted at source into account
No payments on account are required if the relevant
amount is below certain limits
A payment on account can never exceed 50% of the
relevant amount
Section 59A(2)
No payments on account are required in respect of
capital gains tax or Student Loan repayments
Definition of income tax ‘deducted at
source’ for the purposes of Section 59A
Section 59A(8)
Application to Class 4 NICs
Example: Calculation of relevant amount
Each payment on account is equal to 50% of the
relevant amount
Section 59A(2)
Due dates for payments on account
Section 59A(2)
Example: Calculation of payments on account
Collection of payments on account
Section 59A(7)
Claims to reduce or cancel payments on account
Section 59A(3) & (4)
Nature of claim
Time limit for claims
Giving effect to claims
Section 59A(5)
Example: Adjustment following a claim to reduce
payments on account
Incorrect claims to reduce or cancel payments on
account
Section 59A(6)
Changes to payments on account when ‘relevant
amount’ not established until after the first date for a
payment on account
Section 59A(4A) & (5)
Example: Adjustment to previous year and revision
of relevant amount
Changes to payments on account following a discovery assessment for the preceeding year
Section 59A(4B)
Direction by Officer of the Board that payments on
account are not required
Section 59A(9)
SALF304 Balancing payments
A balancing payment (or repayment) is made to reflect
tax liability calculated in the self assessment for the year
Section 59B(1)
Balancing payment takes tax deduction at source into
account
Section 59B(2) & (7)
Due dates for payment
Section 59B(3), (4), (5) & (6) and
Schedule 3ZA
Example: Calculation of balancing payments
Interest charged on late payment of tax and paid on
overpayments of tax
Section 86 and ICTA88/S824
Automatic interest and surcharges
SALF305 Interest charged on late payments of tax
Interest will be charged on any tax paid late
Section 86(1)
Period for which interest charged
Section 86(1) to (3)
Rate of interest charged
Special rules for interest on payments on account of
income tax
Section 86(4) to (9)
Example: Interest on payments on account and
balancing payments
Interest charges following an excessive claim to
reduce payments on account
Section 86(4)
Section 86(5) & (6)
Example: Interest charge following excessive claim to
reduce payments on account
Remission of interest charges on excessive payments
on account
Section 86(7) to (9)
Example: Remission of interest charge on excessive
payments on account
Adjustments to interest charges
ICTA88/S824(3)
SALF306 Interest paid on Overpayments of Tax
Interest on overpayments
ICTA88/S824 (1) & TCGA92/S283
The relevant time
ICTA88/S824 (3) and TCGA92/S283 (2)
SALF307 Surcharges on unpaid income tax and capital gains tax
A surcharge will arise on any tax paid late
Section 59C(1)
The initial surcharge is 5% of any tax unpaid after
28 days
Section 59C(2)
There is an additional 5% surcharge on tax still
unpaid after six months
Section 59C(3)
Example: Surcharge on late payment of tax due
Surcharges on additional tax payable on an amended
self assessment
No surcharge is due if a penalty is determined in
respect of the same tax
Section 59C(4)
Interest will be charged on unpaid surcharge
Section 59C(6)
The surcharge is imposed by a formal notice served on
the taxpayer
Section 59C(5)
Appeals against the imposition of a surcharge
Section 59C(7) to (10)
Mitigation of surcharge
Section 59C(11)
SALF308 Surcharges of tax charged in an assessment for 1995/96 (or earlier) made after 6 April 1998
FA95/S109 (2)
SALF309 Miscellaneous provisions
Cash limit for magistrates’ proceedings
Section 65(1)
Interest is charged on any sum due, including
penalties and surcharge
Sections 69
Payments by cheque
Section 70A
Rate of interest
FA89/S178
