I have just added up all my direct debits and it comes to nearly 5k a month!

[LaurieFairyCake]

I cannot believe it's so high! No wonder my disposable income is so small. £4667 a month!

I've included all fixed costs that I can't do anything about (but NOT petrol and commuting costs which I also can't do much about, or food which is about £600 a month)

It wasn't as bad as this a few months ago but that bloody HMRC thing where they now make self employed people (who earn more than £1000 a year profit) pay on account - actually in ADVANCE of earnings has totally fucked me! Why the hell am I paying tax on money I've not even earned yet!

I'm looking through them and there's not much I can do anything about unless I want to not have my house insured or dogs insured.

OP I think you are looking at it the wrong way; you have plenty of disposable income but (like most people) you choose to spend it in ways which make your day-to-day life more comfortable and enjoyable. In your case, you have a pet dog & buy very particular enjoyable foods.

Both of these choices are luxuries (no one needs a dog, and you can be vegan without lots of replacement items, cheeses, and artisan breads etc) - but you choose these things because they are important things to you and your lifestyle.
There is nothing wrong with that - but it's up to you to consider how you sustain this lifestyle without running up debts. If you don't have savings to cover the shortfall you might have to make some cutbacks if you want to avoid using credit.

As with everything else, these are your choices - but your initial post seemed to be asking for advice, which is why people have responded with suggestions.

Dog you can apply to have your payment on account reduced if you're ever in the same circs again. Just don't go too low or they take it as an underpayment and charge interest.

“Probably Cloud - but all work would be the same due to my health issues. I earn 40-50k a year”

Hang on, do you mean you have turnover of 40-50k? And all the insurances etc are taken out of that? Therefore your personal income is actually a lot less if your business outgoings are significant. Might you actually be better off as an employee (if you can be paid 40-50k) where the employer would be absorbing these costs?

Why are you overpaying your mortgage if you are unable to maintain a positive disposable income?

I think this tax 'in advance' is a red herring. On current rules if your first year of trading is April 2018 to March 2019 you pay tax on that income on 31st January 2020, 9 months AFTER you have earned the money. If your tax bill is over £1000 then you are obliged to make payments on account for the following year. This is calculated on the assumption you will earn the same the following year. You then make a payment on 31st January 2020 for the 6 months income April 2019 to September 2019 meaning you are paying 4 months AFTER you have earned the money. Then the estimated tax for the period October 2019 to March 2020 is paid 31st July 2020, 3 months AFTER you have earned the money. If you are self-employed you should always be putting money away monthly, as you earn it, to cover your tax liabilities. People often get into trouble, particularly in the first year because they do not do this.

Stop overpaying your mortgage if you cant afford it.
Look for a better mortgage deal, that amount is ridiculous for a 2 bed flat!
Food shopping: you could get this down if you wanted to, even without aldi etc. There are always cheaper alternatives out there. Veggie food is usually cheaper than meat so I'm sure with some planning you could wat just as healthily for a lot less money.

she's talking about paying into a budget plan to put money aside for her tax, which she hasn't yet earned the income for, so the simple answer is stop doing that!

This isn't what's happening. Paying tax is different if you're self-employed - HMRC anticipates you'll earn the same in the following year and you have to pay in advance. This isn't a choice for Laurie.

Ignoremeiaminvisible As you say that’s only if you paid the previous year on time in full and put aside money as you earn. Many SE people don’t; that’s not sensible but it is what it is and does mean lots of earnings going on tax at certain periods of the year

I know they don't but if they don't start now what the hell are they going to do when Making Tax Digital comes online in the next year or two? Tax will probably be payable quarterly and (probably) eventually monthly to fall in line with those paying under PAYE. The point I was trying to make is that the OP is NOT paying in advance.

Oh I completely agree- we’re having problems because we’re paying last years tax from this years earnings (underestimate) as well as the payments on account- double payments from one wage

You cannot afford to keep dogs.

Pps who have said your life is about choices are correct.

You are choosing vegan replacement food. You can be vegan without any of this stuff. Just eat vegetables and pulses, they're pretty cheap. For most vegans this is how they live. They don't replace the cheese they would have eaten with vegan cheese, they eat something else altogether.

The same with your dog. That's a choice to have and look after. It's a choice to spend £350pm on daycare. Get dh to walk her. Get a mobility scooter.

Your mortgage is ridiculous for a 2 bed flat, is it gold plated with a cherry on top?!

There's plenty of places you could cut down spending. You are choosing not to and coming up with every excuse under the sun to justify it.

Yes the tax change really screwed us over as well. DH couldn’t earn as much money that year because of the tax burden and ended up over paying. And of course the HMRC take forever to give money back. Terrible.

We just re did our mortgage at the beginning of the year, on the lowest possible rate as we have over 30% equity.

Yes, we shouldn't have arranged to overpay, but that was at the beginning of the year before I knew the tax thing was going to be a problem.

It's also before I knew that my health was going to require so much financial input - so I'm reluctant to put it back now as I need to pay it off before 60 in case I'm properly fucked physically.

Hopefully I will be able to get my food bill down when they finish building the Aldi close by.

Those who said that these are my choices are quite right. Hopefully when the loan finishes next year and when I offset more against tax next year my tax bill will go down.

I initially posted because I was so shocked at how much my fixed costs are - they are bloody huge I honestly thought before I counted that our direct debits were about 1500 less than they are.

"LonnyVonnyWilsonFrickett

HMRC now give you the opportunity to do it all by direct debit in advance.

Then don't take the opportunity? Why would you?"

I was about to post exactly the same.

The OP says she's doing it (by choice) because she is rubbish at saving, but all she is doing is saving it with HMRC instead of in her own account. The money needs to be set aside out of profits each month regardless.
The most here is that OP presumably didn't save the money each month previously and so is having to pay tax on previous profits out of currently income while at the same time making budget account payments towards tax on current profits.

Normal payments on account are not in advance, they are part in the current tax year (31 Jan so at the earliest based on March year end, 10 months in to pay 50% based on prior year tax) and part after the tax year (31 Jul) with a balancing payment on 31 Jan following and if they owe you money back refunded as soon as you get your tax return in.

In fact if you had a 30 April year end the profits you earn in the year ended 30 April 2019 fall in 2019/20 and you pay tax on them in Jan 2020 & Jul 2020 with the balancing payment in Jan 2021 - well after the actually year you earned the profits.

That’s still ridiculous we spend approx £400 a month for food toiletries etc for 8 of us, two adults , one teen four primary and one pre schooler.

Ahh the mumsnet race to the bottom

Well done you for spending less than 1.70 per person per day. 🙄

OP welcome to my world! Weirdly our monthly outgoings also add up to about 5k it’s scary. We pay the same for our mortgage as you, and dh pays tax on account but he’s been doing that about 3 years now. He has a lot of expensive professional fees including indemnity insurance. Although we have one large outgoing (which is definitely a choice) and that’s school fees for our ds.
But I absolutely understand the feeling of thinking that we have what looks like a good income so why don’t we feel well off?

While payments on account are a pain the first time you hit them, you are not paying tax in advance of earnings you've already made.

For example, a payment made in July 2019 would be towards tax due for 2018/19, the tax year which ended 5 April 2019.

Even with payments on account you are actually still better off than PAYE employees, who pay tax on earnings each month.

It completely sucks when it is unexpected, but after the first year its fine and balances itself out. As the tax is estimated on your prior years income, if your income has dropped you can apply to HMRC to have them reduced.

As far as I'm aware I'm paying all of 2018/19 tax PLUS all the tax until April 2020 right now.

My tax return says I'm paying 2019 -2020 NOW

Not having a clue at how much your outgoings were is probably a big hint as to why you are in trouble now! Put it all in a spreadsheet and start properly tracking your finances before you end up in an even bigger mess.

I think it's because so many direct debits are 'new'. I have added so many over the last year.

Last time I had it all written down at the beginning of the year we were at £3k

You can't be though. I've just gone into self assessment and I can't file a return for 19/20 yet. You may be saving for that year into your budget account (in which case, stop and save it somewhere else so you can use it!). I have literally (yesterday) just paid my balancing payment for 2018/19 - you're a year ahead!

I know you can't file a return for next year. HMRC are taking (and I can't stop them) money towards 2019/20 tax bill on account

They make everyone do it now (who earns over 1k profit)

They REALLY DON'T make everyone do it.

No they don't. I make significantly more than 1k profit and as I've said repeatedly, I pay two payments on account in the Jan and July after I've earned the money.