Do you put money aside for tax during the year?

[Merguez]

I always seem to leave doing my return until the last minute, not usually a problem as so far earnings have been relatively low.

But this year my earnings have gone up a lot thanks to a new client and I realise that I am going to have a very large tax bill for the current tax year - and I should be putting money aside for it now or there'll be a nasty shock.

Would be interested in knowing how other freelancers manage this?

Sorry, 'keep it'.

I paid myself a weekly ( smallish ) wage, from my small business and everything over and above that always went into a saving account, then when the tax, was paid , the rest was my 'annual' wage which moved over to my ordinary account. Done this for 30 years - retiring this year

onlylovers
In past years I kept it in my mortgage overpayment fund - earning an effective rate of 3.6% before tax

now I have no mortgage I'll probably think of something else creative to do

Thanks for the suggestions!

I put 20% of income away in a savings account. My expenses aren't that big so 20% of income has usually covered it.
I do sometimes use that money as emergency cash flow but ONLY if I know I have the income coming to pay back what I've used so only if a payment I'm sure is coming is delayed or I have to pay a sub-contractor before my payment has cleared.

Also I ALWAYS do my tax return by August at the latest so there's ages before the payment date. I honestly don't understand why anybody would wait till December/January.

I used to religiously set aside a quarter of all i earned solely for tax and paid for other business expnses from my work account. Now, though, I'm part time and earning much less. So, now, each month I subtract £833 (which is roughly the personal allowance that's tax free) from my income and then save a third of whatever is left. Sometimes I am saving a tiny amount eg, if I have only earned £900, it's £22 which hardly seems worth it!

You must all be self employed and not work through limited companies?

egnahc, I am self-employed, yes. Looked into setting up a limited company but it was a lot of fiddle and not (IMO) entirely ethical, and the financial benefits anyway would be marginal, as I don't earn much really.

museummum, do you mean 'do your tax return' as in work out the numbers, rather than actually pay it? I like to know in advance how much my bill's going to be so it's not a last-minute surprise. There's no way I'd be able to find the actual money that far in advance though!

I do the whole thing online in August/September. The date the invoice has to be paid is still 31 January.

Is that why people might put it off? Because they fear having tonpayvearlybif they submit early? That's not the case.

IMO the earlier you know what the bill is going to be the better.

No, I didn't mean people fear having to pay it early (although who knows; some people might think that's the case!). I was just asking if YOU paid yours early because I wasn't sure if by 'do my tax return' you meant 'and pay it', or just 'fill in the thing and find out the bill.'

I realise now you mean the latter. That's what I do too; at least then I feel like I've got a chance of putting aside enough money to cover it come January!

Yes. I meant fill it in and submit it to hmrc and receive the invoice :)