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HMRC internal manual

Self Assessment Manual

HM Revenue & Customs
, see all updates

Returns: individuals returns: notional tax and payments on account: individuals

Under Section 59A TMA 1970 payments on account are calculated by reference to a ‘relevant amount’ of the income tax assessed for the previous year.

The relevant amount is the amount by which the total income tax contained in a person’s self assessment, after allowances and reliefs, exceeds the amount of tax deducted at source.

Taxpayers do not have to make payments on account if 80 per cent or more of their total income tax assessed for the previous year was tax deducted at source.

For the 80 per cent test, total income tax assessed should also include

  • Notional partnership tax
  • Notional tax and tax credits on UK dividends
  • Notional tax on non-qualifying distributions and loans written off
  • Notional tax on income from trusts / settlements and estates
  • Notional tax on chargeable events


  • Recoverable tax on charitable covenants / annuities and Gift Aid paymentsThe computer calculates the correct payments on account due, and the figure in the ‘Notional Tax / Tax Credits’ field in function CREATE RETURN CHARGE is taken into account when calculating the 80 per cent test for payments on account. It is automatically updated with information following the capture of returns.

An agent or taxpayer may contact you about this problem before the return is submitted in which case you should ask them to highlight the matter when submitting the completed return. Other cases may not be identified until after the return has been captured.

In all cases the return should be processed as normal and where payments on account are not required under the 80 per cent test, action should be taken to remove the following year’s payments on account from the SA record.