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Sole Trader to LTD Company Payments on Account Help Please anyone?

(6 Posts)
Overtherainbow40 Sat 31-Jan-15 22:00:55

I am a sole trader and becoming a LTD company next week. Once I become a LTD company my tax will be less (that's why I'm doing it) however my payments on account will by July (coupled with the payment on account due Jan 31st 2015) will be greater than my tax owed on Jan 31st 2016, because of becoming a LTD company.

My question is to all you accountant whizzes, is if I do my taxes early, say in May 2015 after the financial year ends, will I still have to pay my payments on Account? How does it work?

Or will I have to pay my payments on account anyway in July and then wait for rebate in Jan of 2016?

Confused!

JennyWren Tue 03-Feb-15 12:14:41

I have just changed in the same way - sole trader to Ltd company. When I completed my last tax return (in January) for the 2013/14 tax year) I selected the option to reduce my payments on account for the 2014/15 year, stating my change to Ltd company employed status as the reason. I made a calculated guess as to what I thought my income tax for the 2014/15 year would be, and paid the first half of that at January 2015. I plan to do my 2014/15 tax return in April/May/June (well before the July 2015 payment on account instalment is due), and when I have a confirmed amount owed I'll apply to adjust my second payment to be the exact outstanding balance.

Overtherainbow40 Thu 05-Feb-15 21:37:36

Thank you Jenny. That's great. I didn't opt to reduce my payments on account when I paid my bill on the 31st of Jan. So the 50% I have paid on account, will be more than 50% of my bill (as I will have made roughly the same as last year by the end of April I think) and that means if i get my taxes done well before July, I'll just need to pay the remaining balance. It'll be nice to be ahead of the game :-)

Chasingsquirrels Thu 05-Feb-15 21:44:32

If you submit your tax return before the 2nd payment on account and the total due is less than the sum of the two then it will automatically be reduced to just the balance.

You can reduce your payments on account to nil if you want, but HMRC will charge interest on any amounts that should have been paid, but not penalties.

Overtherainbow40 Thu 05-Feb-15 22:54:51

Thanks Chasing.

Next questions is once a Ltd company can I set up for child care vouchers? I'm assuming I can. I know there were some other threads on this some time ago but cannot find them.

Any info much appreciated.

cookiemonster100 Fri 06-Feb-15 16:56:25

Hi, similar position here!
Yes to childcare vouchers, they are allowable expense. I found out that you don't need to use organisations that provide childcare vouchers. You can setup a standing other to your OFSTEAD registered nursery / childcare & pay the remainder out of your personal funds.

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