HMRC internal manual

Debt Management and Banking Manual

DMBM210165 - Payment Allocation, Overpayments and Repayments: Self Assessment: Automatic Payment Allocation and Interest

Each time a payment is allocated or re-allocated to a charge a review of the interest position takes place automatically.

In the case of an unallocated amount any interest is calculated from the relevant due date of the charge to the effective date of payment(EDP).

Up to 28th January 2000Prior to 28th January 2000 where the amount re-allocated is an overpaid amount, any interest was calculated from the Relevant due date (RDD) of the charge to the date of re-allocation.

If re-allocation of an overpaid amount took place after the RDD, the customer was given Repayment Supplement (RPS) and charged interest for the common period which ran from the later of the RDD or EDP to the date of re-allocation, see example below. For more information see DMBM210170.


A customer pays the first payment on account (PoA) of £1000 on 29 January. She makes a claim to reduce the PoA to £700 on 31 March but does not claim repayment. The £300 excess credit remains on the record.

On 31 May we process another claim increasing the PoA to £900. £200 of the excess is allocated to clear the additional liability.

When the £200 is allocated the system calculates

  • RPS for the period 29 January to 31 May on £200, and
  • interest for the period 31 January to 31 May on £200. The period 31 January to 31 March is known as the common period because both interest and RPS are calculated for this period.

The calculation of interest and RPS for a common period can disadvantage the customer.

Follow the instructions in DMBM210180 and DMBM210185where you

  • identify a customer who has been disadvantaged by the calculations, or
  • receive an objection because of the interaction of interest and RPS

From 28th January 2000From 28th January 2000 where an overpaid amount is re-allocated, the system uses the effective date of payment (EDP) for calculation of RPS. This will only be given if the customer makes payment earlier than the RDD of the charge. Interest will also be calculated from the RDD of the charge to the effective date of payment of the overpaid sum and so this avoids a common period arising for RPS and interest.