Follow Us

October 4, 2019

October 8, 2018

Please reload

Recent Posts

Why am I having to pay tax before it's due?

March 1, 2018

One of the main differences between employment and being self-employed is that when you are employed HMRC receive your tax on a monthly basis through your employers payroll system whereas when you are self employed HMRC don't receive your tax that is due until you submit your personal tax return.

 

The filing deadline for completing your tax return and paying your tax due is the 31st January of the following year.  For example, if we consider the accounting year 1st April - 31st March 2017 then the filing and payment deadlines aren't until the 31st January 2018.  This means that HMRC doesn't receive any tax that is due until potentially 10-22 months after you received the income. 

 

Very few organisations offer credit for this period of time and so to overcome this HMRC introduced "Payments on Account".  Payments on account allow HMRC to request the tax that is due in advance based on your previous years tax that was due (if this was over £1,000).  These are paid in 2 instalments, one in January and one in July with any balance being due the following January. 

 

It is important to stay on top of your finances, particularly if your profits are increasing so that you can budget for the payments on account.  If your income is likely to reduce or cease in the following year, however, then you can claim to reduce your payments on account. This is relatively straightforward to do although care needs to be taken as if you reduce your payments too low then HMRC will charge interest on the difference.

 

Provided you budget for your payments on account then these are actually a good thing as they reduce the tax due in January and by paying in 2 instalments ease your personal cashflow.

 

Ashored Bookkeeping and Accountancy can support you with identifying the amount of tax you are due to pay and provide you with details on how to pay.    

 

 

 

 

Share on Facebook
Share on Twitter
Please reload

Please reload

Archive

  • Grey Facebook Icon
  • Grey Twitter Icon
  • Grey LinkedIn Icon

© by Becca Scouse