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For tax years beginning on 6 April 2009 the threshold below which
individual taxpayers do not need to make in year payments on account (PoA)
is to be doubled from £500 to £1,000.
Currently a taxpayer having a balance owing on their tax return of £500 or
more (and where less than 80% of their total tax liability was covered by
withholding taxes) will be expected to make in year payments on account for
the following tax year. For example a taxpayer owing £600 for 2006/07 may be
expected to make payments on account for 2007/08 of £300 each. These
payments would be due on 31 January 2008 and 31 July 2008 respectively. The
doubling of the threshold is expected to remove approximately 367,000
taxpayers from the PoA regime. This will alleviate the tax compliance burden
for a large number of taxpayers and effectively provide them with a further
nine months to pay any tax expected to be owing.
Our view
The current threshold of £500 was set in April 1996 and has remained
unchanged. The increase to £1,000 is therefore to be welcomed as an
overdue change to ensure that self assessment thresholds maintain there
link with increasing incomes. |
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