What types of payments are not included in payments on account (POA)?

Payments on account (POA) refer to advance payments made towards certain types of taxes that are assessed based on income or gains, typically for individuals who are self-assessed. When considering the types of payments that qualify for POA, it's essential to understand which taxes are eligible for this system.

Capital gains tax is specifically not included in the payments on account. This is because capital gains tax is typically calculated on the gains that have actually been realized when assets are disposed of, rather than being based on an estimate of future gains. The tax liability for capital gains is determined at the end of the tax year when the actual details of disposals are known, rather than relying on a pre-payment system like POA that is primarily designed for ongoing income tax assessments.

On the other hand, Class 1 National Insurance Contributions (NICs), corporate tax, and VAT are all forms of payment for which POAs are relevant, as they often involve ongoing liabilities that can be estimated and paid in advance. This structure is designed to help taxpayers manage their liabilities by spreading payments over the year, based on projected income or profits.

In summary, the reason capital gains tax is the correct answer is that it operates on a different basis from other taxes subject to POA