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Original poster

I have what is probably a very stupid question about taxes

15 replies

Tee2072 · 01/04/2011 13:33

I am just about to wrap up my first year of business. I know my return isn't due until next January, but I am hoping to at least do the maths and get an estimate of how much I might owe, if anything.

If I do owe, am I right in assuming I have to pay it one whack? What if I can't? I work very part time freelance and my husband's job actually keeps us going with my job for extras, but there isn't much at the end of the month for extras!

So does HRMC put their hand out 31/1 with no excuses accepted?!!?

OP posts:
Lougle · 01/04/2011 13:47

Have you not been keeping a certain % back each time you are paid??

Seriously, say tax is 20%, and you are given £50 for a job, you think to yourself 'hmm....only £40 of that is mine....'

So yes, I would imagine that HMRC will be putting their hand out for prompt payment.

I know of one business owner who had HMRC petition for Bankruptcy, and won, despite all parties knowing that cheques were due to come in which covered the entire amount owing just 2 days later...

"...there isn't much at the end of the month for extras!"

Tax isn't an 'extra'

onesandwichshort · 01/04/2011 13:56

Yes, I'm afraid that's true, the only way to survive being freelance is to stick 30% of your earnings in a bank account every time you are paid. Generally, then, you discover you've saved a bit over, which is also nice.

The bad news is that, on Jan 31, you don't just have to pay the tax owing for this year, but also an amount towards that year's tax (usually 50% of what you have paid based on your last tax return). And then a similar amount on July 31st.

So if you are assessed as paying £2k for 2009-10, you will need to pay £3k on 31 Jan, and £1k on 31 July. (If you earn less in a following year, you can ask for this amount to be reduced).

But the good news is that you do still have 10 months to save what you need.

Original poster
Tee2072 · 01/04/2011 14:05

I wasn't saying tax was an extra, I meant that my pay, which is suppose to be for extras, actually has to go to meet our bills.

And I was saving part of each cheque and then we had some emergency items come up and I had to use that money I had saved in order to meet our bills.

Thanks for your detailed response, onesandwichmore. I knew about the assessment and July date. And, if all goes as planned, I will be able to save whatever I owe over the next 10 months as I should be picking up a new client in a few weeks and lessening some of our household expenses at the same time!

OP posts:
mollymole · 01/04/2011 14:11

i know this sounds very harsh but the money you put away for tax you have spent already - it does not matter what the circumstances are you can't spend it - if it had been docked from your wages then it would not have been there and that is how you have to treat it - have you seen an accountant yet they will almost certainly be able to claim more in expenses and allowances than you would and you may not owe nearly as much as you htink

Lougle · 01/04/2011 14:20

"I wasn't saying tax was an extra, I meant that my pay, which is suppose to be for extras, actually has to go to meet our bills."

You are missing the point. If you spend all of the money you receive in payment (no matter what the reason), you are actually spending around 30% of someone else's money.

That 30% is NOT your pay. Never was. It is the amount that you have to pay in tax/NI.

Original poster
Tee2072 · 01/04/2011 14:34

Thank you all very much for your input. I'm hiding the thread now because I didn't start it to be lectured about the way I handle my money.

OP posts:
grumpypants · 01/04/2011 14:37

Don't go - I have nice advice, not a telling off!

sarahsyrup · 01/04/2011 19:15

the first 7,475 is tax free :-) there's a positive thought. If you had any trouble managing your money you wouldn't be on here asking advice 10 months in advance of having to pay anything. What you do owe you've got plenty of time to save up.

Lizcat · 03/04/2011 18:29

In answer to your question as soon after the 6th April you have all the relevant information like statements of interest from Banks etc you can do your tax return so you know what you owe, HMRC will love you for this. Then you have to pay by the 31st Jan as already pointed out you will have to pay all of 2010-11 tax and 50% of estimated tax for 2011-12 on account then. The other 50% on account is due on the 31st July. The good news if they owe you money which they sometimes do they make sure it is in your bank account by the 31st Jan too.
My tax return pack from my account will fall on my door mat on Wednesday morning I can guarantee.
I have posted my nice advice in case you pop back to check

TracyK · 04/04/2011 13:18

It wasn't £7475 for year end 2011 was it - it was only £6475 wasn't it?

I presume - you can submit your return now and just pay a monthly amount when you have enough during the year?? They'll just post it as payment on account and then you won't be able to spend it.

TalkinPeace2 · 04/04/2011 13:23

Tracy
but anybody with a tax bill over £2000 will have had to make their payments on account already....

TracyK · 04/04/2011 13:43

This is only her first year of trading though...so not started on the 'on account' treadmill.

TalkinPeace2 · 04/04/2011 14:47

true, but the OP is long gone, she hid the thread a while back and has had her answers from a different site

TracyK · 04/04/2011 15:25

How do you hide a thread?
I thought she was only kidding and huffing around somewhere still watching.

TalkinPeace2 · 04/04/2011 15:43

top of screen, next to flip, just below topics - you never see it again unless you go into your main settings and unhide it

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