Guide to Claiming Adjustment of Payments on Account

What are Payments on Account?

Payments on account (PoA) are advance payments towards your expected tax liability for the current year. They’re calculated as half of the previous year’s tax and National Insurance liability (after deducting capital gains tax, tax deducted at source, and other specific items).

When Can You Make a Claim?

You can claim to adjust payments on account if you believe:

• Your expected Self Assessment liability will be less than the calculated payments on account, or
• You’ll have no SA liability or it will be covered by tax deducted at source

Time Limit

Claims must be made by 31 January following the end of the tax year.

How to Make a Claim

Valid Methods

• Online: Using SA Online or form SA303 through Government Gateway
• In writing: Including fax or posted form SA303
• By phone: Only to HMRC Contact Centres

Requirements for a Valid Claim

1. Must be in writing (or through official online channels)
2. Give a clear reason for the reduction/increase
3. State the adjusted amounts or provide sufficient information to calculate them
4. Be signed (if on paper) by taxpayer or authorized agent
5. Received before the deadline (31 January after tax year end)

Acceptable Reasons for Reduction

• Business profits are down/business has ceased
• Other income has decreased
• Tax allowances and reliefs have increased
• More tax deducted at source than previous year
• Expecting to claim carry-back relief

Unacceptable Reasons

• “I am unable to pay” (this is about affordability, not liability)
• No reason given at all

The Process

Step 1: Submit Your Claim

• Complete form SA303 online or on paper
• Provide detailed reasons supporting your belief
• Specify the reduced amounts you believe are due

Step 2: HMRC Processing

Digital Processing (from April 2017)

Most online SA303 forms are processed automatically, creating SA notes with:

• Date received
• Reason code (1-4 corresponding to common reasons)
• New payment amounts

Manual Processing Required For:

• Mismatched personal details (name, address, NINO)
• Cases with special signals (Bankruptcy, Enquiry, Enforcement, etc.)
• Late submissions
• Complex cases

Step 3: HMRC Response

If Valid Claim Accepted:

• You’ll receive acknowledgment letter SA614 (warns about interest if reduction is excessive)
• Payments on account adjusted equally between both installments
• New amounts become due on original dates (31 January and 31 July)

If Invalid Claim:

• You’ll receive letter SA811 explaining why claim was rejected
• Original payment amounts remain unchanged

Important Consequences

Interest Implications

• If you reduce payments too much, you’ll be charged interest on any shortfall from the original due dates
• Interest charges apply even if your claim was made in good faith

Automatic Review

When you submit your actual tax return:

• HMRC compares your claimed reduction with actual liability
• If you over-reduced, interest is charged on the difference
• If actual liability is lower than even your reduced claim, excess payments may be refunded with interest

Penalties

Fraudulent or negligent claims can result in penalties.

Key Rules

Payment Splitting

• Adjustments always split equally between the two payments on account
• You cannot reduce just one payment

Minimum Thresholds

• No payments on account required if previous year’s liability was under £1,000
• OR if more than 80% was deducted at source
• However, if you claim to reduce below £1,000, the reduced amount is still payable

Multiple Claims

• You can revise your claim multiple times before the deadline
• Each revision replaces the previous claim entirely

What Happens Next?

1. Processing Priority: Claims receive priority attention and should be processed same day
2. Payment Allocation: Any overpayments from reduced claims remain on your account for future liabilities unless you request a refund
3. Time to Pay: If you have existing payment arrangements, these will be reviewed after claim processing

Tips for Success

• Be specific about why you expect lower liability
• Provide calculations supporting your estimate
• Consider all income sources when estimating total liability
• Submit early to avoid last-minute issues
• Keep records of your claim and reasoning

Remember: This is about your expected tax liability, not your ability to pay. If you’re having payment difficulties, you should explore Time to Pay arrangements separately.