I submitted my tax return a few days ago for the first time. It did say at the end an amount that is "payable to me" . Anyway, I logged in today only to see At glance section: You have nothing to pay. Underneath it says: You have a total amount of 8K becoming due to payment. I'm completely confused now. There is a breakdown of charges for tax yearn ending 5/4/15 that should be paid by 31/01/15 and second payment for the same year is payable by 31/7/15. At the end it says balancing payment for tax year ending 5/4/14. What does all this mean? Please if any one can explain, I would be grateful, can't get my head around all this. I thought there is nothing to be paid..
This looks an interesting read. I've not yet come across payment on account as I don't earn that much as self employed, over 80% of the tax I pay is done via PAYE. So think that is why I don't have to pay-on-account.
Is all your income via self employment or is some also via PAYE?
Usually what happens it that you pay the tax you owe on 31/01. They then use this figure as a rough estimate of what you are likely to owe in the next tax year i.e. the one we are in now, and they divide that into 2 chunks. One is due on 31/01 and the other in July. There is an option to reduce it manually on your tax return and a box to explain why you want to do that e.g. if you don't think you are earning as much for example. You can make amendments up to 72 hours after your return is filed. I'm not a tax expert- this is just from my own observations
Part of my income is a rental income and the rest is through PAYE. What confuses me is that when I submitted the tax, it calculated it like I'm due for refund! It clearly said £XXX payable to me! Now, yes one payment is due by 31/1, second by 31/7. So the total is around £4K, which is "balancing payment" but then that 4K is doubled and it says only TOTAL: 8K!!! Please help.
So if you have to pay £4000 for 2013/4 then you have to pay the £4000 plus £2000 by January 31st on account and another £2000 by 31st July on account. Next January assuming you earn the same as in 2013/4 you wont have to pay £4000 but will pay some on account again etc
If property is mortgaged then the mortgage should be entered as expenses so the profit will be difference between rent received and mortgage paid. This profit is what is taxable at the relevant percentage
The other £4000 is for the tax year we are in 2014/15. It's an estimate of what they think you will owe and you are paying in advance, so to speak. When you do your next tax return, if it's too much you'll get a refund. The sooner you do your return after the end of the tax year the better, if possible.
Thank you all - yes, I need to find an accountant to check all this for me as something is somewhere wrong. I've been paying tax, and a lot of it, and now this massive bill - don't know what to think. Thank you again.