I need to confuse DD with tax payments on account.....is this right?

[KatyMac]

If you think you will earn £20,000 this year you will pay tax on everything over £11,850

So 20,000-11850=8150
8150*20%=1630 which is due in January 2019

Also due is January because the tax man is mean is 50% of that towards next years tax

So in January you owe 1630+815=2445
Then in July you owe 815 plus the amount your self assessment says less 1630)

In April you do your self assessment and it tells you home much tax you actually owe

& the following January you pay half of amount as tax

repeat as necessary

Thanks talkinpeace I will give it to her; you should have seen the lighbulb moment when I explained the receipt for the subway with a drink and chocolate was more that a fiver but that we couldn't put it in because she hadn't kept it! Oh and the understanding that buying a top in primark and wearing it on stage didn't count but if the choreographer sent her an email saying wear a lime green top the purchase of said top did (if we print the email and attach it to the receipt)

Quick books is what I wanted but she has gone with monzo and cleo (neither of which I know)

I thought the limit was £1000 but i'll check

If she started in April 18 she does her First tax return April 19 and pays her first lot of tax Jan 2020, not this year. I've just done my first year of accounts.

I think you’re right to get her started KatyMac. iIRC your Dd is young still? Who wouldn’t want to help their child out in the beginning. She’ll get the hang of it after a few months —or 6– and can come back to you if she needs more help with it.

This might help:

www.gov.uk/self-assessment-ready-reckoner

And

www.gov.uk/understand-self-assessment-bill/payments-on-account

That's the bit I forgot Fruitcider

How many 20 year old would say I'll worry about that later if told "you don't have to pay tax until 2020" ?

Your class 4 nic is still wrong. There's a different threshold, it's not the same as the tax personal allowance, so NIC is higher as it's on profits higher than the NIC threshold which is about £8k, so 9% on around £12k.

And NIC applies to payments on account too, so half of the prior year NIC is also payable in each payment on account.

It's only the class 2 NIC that isn't included in payments on account, but that's being scrapped next April anyway, and presumably class 4 NIC will be increased to make up (not yet announced).

Thanks - I was never any good at NI - I never earned enough

Apparently they did a class on tax at college and you have to pay it in October....

There's no shame in needing help on this subject irrespective of age.

I would definitely recommend a separate account to pay the tax money into.

Most people I know either calculate their exact tax bill every time they earn any money and pay it into a separate account, or save x% of all income. I do the former, but it is more effort.

Finally, note that in Jan 2020 she will have a good idea about profits for the y/e March 2020. If profits are lower she can opt to reduce the payments on account. If she is subsequently wrong she will be charged interest, but this very useful if income is volatile.

If you used some decent accounting software like Freeagent, it would work out your estimated tax/nic liabilities as you went along.

Hi Katy (waves). There's a lot that's allowable for expenses in her industry that you wouldn't immediately think of, and for a time I worked in an accountancy practice that specialised in it, so if you need help let me know

Thanks Taxi - graduation tomorrow, show tonight - excitement all round

Well done her! If you just think sod it, a lot of my friends use Theataccounts as their accountants. But yes there are a lot of things you can claim that you'd not think of. Getting her into the habit of saving is a good idea. I am crap at that bit 😂

As stated early, payments on account only apply if you are within self assessment and last year's tax bill was at least £1,000. (or you have paid less than 80% of your tax liability through PAYE or other ways tax is taken off at source).
See here: www.gov.uk/understand-self-assessment-bill/payments-on-account
The sting is therefore that in the first year - because you have no history - come the January after your first tax year ends you will pay ALL the tax due for that tax year PLUS 50% of the tax on account for the following year.
Always try and put some money by - 30% is a good rule of thumb - you can pay in advance straight to HMRC - see here: www.gov.uk/pay-self-assessment-tax-bill/budget-payment-plan or you can save it into a separate bank account if you have the self discipline not to spend it.
A good source of information other than HMRC for a relatively low earner who does not want to pay for an accountant is the website of the charity Tax taxaid.org.uk/guides/informationAid :