I have been self-employed for 14 years, and have an accountant etc, and pay my taxes as demanded. However, if you are self-employed your income can fluctuate dramatically, but you are taxed as if you earn what you did the previous year IFYSWIM.
So you have a really good year, then a drastically bad one, but in the bad year you are taxed on the basis of the previous good year. What this really means is that you can never get ahead (unless you earn megabucks enough not to worry).
If you are on PAYE your tax is taken at source, on the basis of what you earn that year and you dont have to think about it (except begrudge the amount obv!)
The move to the current plan was brought in by GB (I think?) to bring forward tax revenues - but takes no account of fluctuations in income. In the current economic climate especially, wouldnt it be fairer to pay tax on what you ACTUALLY earn, rather than on what you MIGHT earn?
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About HMRC and self-employment?
14 replies
boschy · 10/05/2013 14:36
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