Question on UK "1st Payment"/"2nd Payment"

I just completed (but did not yet send) my UK 2007-2008 taxes online.  When I got to the summary page, it showed my total due for 2007-2008, PLUS my "1st Payment on account due for year 08/09". It showed a further amount due on 31 July 2009 for "2nd Payment on account due for year 08/09".

So my question is: When I filled in this online 2007/2008 taxes, was I supposed to deduct somewhere the "1st payments" and "2nd payments" I already paid for 2007/2008 last year when I filed my 2006/2007 taxes?   I hope that makes sense!

I looked everywhere I can't figure out if these 1st and 2nd payments are some sort of advance payment on my next year UK taxes. Any help would be greatly appreciated. Thanks!

If you are self-employed or have other non-employment income, you have to pay estimated taxes in advance. It is very much like the system in the US, except that in the US you have to pay estimated taxes on a quarterly basis, whereas here, you pay 50% of your advance payment on 31 January and then the other 50% on 31 July.

Hi Misch,

Yes I'm self-employed and I understand the part of paying estimates taxes in advance.

But my question is, since I've already paid a portion of my 2007-2008 taxes in advance last year, shouldn't that logically mean that I can deduct those advance payments from my 2007-2008 total amount due? If so, where on the tax form do I enter those previous payments?

Cheers

HMRC would usually deduct for you.  And then add on roughly the same as part payment in advance for next year.


Vicky

So my question is: When I filled in this online 2007/2008 taxes, was I supposed to deduct somewhere the "1st payments" and "2nd payments" I already paid for 2007/2008 last year when I filed my 2006/2007 taxes?

It makes total sense, and indeed is a very sensible question to ask. It is a shame that HMRC, when developing their computer system, did not give sufficient thought to the matter.

No you don't enter those payments into the system, and a look at the full calculation will show that HMRC acknowledge that the 2007-2008 payments on account have not been taken off.

However you are required to make a payment by 31.01.09, and when making that payment you will indeed take off those 2007-2008 payments on account, when calculating how much you actually need to pay.

Does that make sense?

I expect you have already done so - but don't forget for next year you wanted to pay most of that tax (but not Class 4 NIC) before 31 December each year so you get to claim it as credit on your US returns.

JohnL & Guya, thanks so much for that advice. Yes, its very clear to me now. I'm going to go back and try it now. And kicking myself for not filing before Dec. 31!