[john tomkins]

what i mean by this, is come tax time, when you have to pay it, the tax man expects you to have it ready, he also expects 50% of this years tax as a deposit for next year at the same time, so say you got to pay 1000 tax bill for this year, you ahve to pay 1500  as half is for next year,  this was explained to me by the inland revenue.  

If April 2009 tax bill is £1000, you don't pay that £1000 till Jan 2010...9 months later.
They also want 50% of that £1000 which is £500 at the same time in Jan 2010, this would be 4 months later as it's earnings from Apr to Sept 2009.
Come July 2010 you are due to pay the remaining 50%..£500 tax, earnings from Oct 2009 to Apr 2010... 3 months later.
If April 2010 tax bill is now up to £1200, you already have £1000 "on account" so you just pay £200 in Jan 2011 + 50% of the £1200 and 50% of the £1200 again in July 2011....
So you never pay tax before you earn it, contary to some folk's explanations

[Neil Williams]

So you never pay tax before you earn it, contary to some folk's explanations

Equally if new people coming into the self employed market remember this......Your first year of trading is NOT tax free.
So at the end of each week or month calculate at least 25% of your takings and put that away in a totally different account which you can't touch other than to pay your tax and NI
That way you won't become one of those we read about this time of year bleating on about not having the money to pay their upcoming tax bill.

[Nathanael Jones]

I pay my tax in advance by direct debit every month. It means that the tax man has thousands of €uro of my hard earned money earning interest for him instead of me, so in one way it isn't very clever,... but I find that the scheme means zero stress at the end of the year as there is no big tax bill,.. and no temptation to "borrow" some of the saved tax money every time Alex releases a new pole!

[macmac]

I pay my tax in advance by direct debit every month. It means that the tax man has thousands of €uro of my hard earned money earning interest for him instead of me, so in one way it isn't very clever,... but I find that the scheme means zero stress at the end of the year as there is no big tax bill,.. and no temptation to "borrow" some of the saved tax money every time Alex releases a new pole!

That's the best way. What you would earn in interest is peanuts anyway.

Peace of mind is worth much more.

[daz1977]

gazza

they can, it make no difference to them,  they can only go off what you tell them, even if you spend 1 nite making it up it is better than nothing at all

john, 

i was trying to ge the point over that he has to have it saved, as a lot dont in there first year, as they dont seem to think that the tax man will catch up to them in there first year, i just got the dates wrong, long time since i did a first years trading lol  like neil said  a lot think there first year is tax free, and they get a nasty shock