hello - hoping MN might be able to help before i have to ring HMRC and sound like an idiot..
I was made redundant June 10 and went freelance straight away. I know I don't have to submit my self assessment for April 10 to April 11 till Jan 2012 but would like to get it done whilst its fresh in my mind and get it out the way. But, i also know in Jan 12 I need to make a payment on account for the year still to come - so April 11 to April 12. Can anyone direct me to some info re how this works or explain it? Do I do that separate from the 10/11 return? How do I work out what I owe on a year that hasn't finished yet??
TIA - really don't want to screw it up and get on wrong side of tax man but feel like I should be able to do it myself without an accountant as sums are quite small.
When you do your tax return it will tell you exactly how much you need to pay by 31st Jan 2012 including payment for the year to come. You can't 'get it wrong' as long as you put numbers in right, it is calculated automatically.
FYI if you owe £1000 tax for this year, they will ask you to pay £1500 by Jan.
You don't need to make advance payment if you owe less than a certain for this year. I think it is (or was) about £600
your payment on account will be 50% of your earnings in 10-11 - so you'll pay the full tax owing for 10-11, plus half again. The second half then is paid in July 2012, and any remaining payment/refund is sorted out when you file in Jan 12.
You can plug all the figures into the online filing system now, and it will calculate your tax due, then just add 50%. Bear in mind though, that the tax due for 11-12 is unlikely to be the same as for 10-11 (if you didn't work a full year), so it's a sensible idea to keep track of what going on throughout 11-12 and put the tax money to one side as you go notspenditallonshoes.
you make payments on account based on your liability for the current year. But remember if you have a bumper year and expect to have less profits the following year you can apply to reduce the payments on account
It's really easy to do it yourself online; the only reason to get an accountant is if you're thinking of applying for a mortgage using your income within the next three years because you'll need three years of accounts to show the lender.