Reducing your payments on account
While the POA regime undoubtedly serve its purpose, it would have been impossible to predict the considerable change in circumstances that a global pandemic has brought to so many people’s finances. Due to the various national lockdowns that have persisted since March 2020, many taxpayers will find that their taxable income in 2020/21is lower than their taxable income in 2019/20.
However, the 2020/21 POAs are based on the income tax liability for 2019/20. This means there is a chance that the 31 July 2021 payment as calculated on the 2019/20 tax return will result in an overpayment of tax.