[A.J]

Hi Guys,

Having a bit of an issue with the tax man atm and finding it hard to see the light.

For the year ended april the 6th 2009 on turnover of 32 - expenses & allowance - a profit of 21 I'm having to shell out with the two payments a whoping 9,500 45% of my profit by October. Also I have paid the £100 fine and ongoing intrest. I've been told by them and my accountant to expect "about the same in January"    And just been hit by some 5% surcharge which I wasnt told about.

I Haven't fully worked out the year end april 2010 yet but have strong reason to belive that the profit might not be as much due to re-tooling and investing back in. I have tried to mention this to my acountant and the tax man and they dont want to know. nor tell me to much about how payments work or whats coming up.

Can anyone put to me in a simple answer how this whole paying up front thing works and whats gonna happen in January as im getting close to either shuting up the shutters and flying a new flag. Or going to find a bridge 

Is it possible to be overpaying? and can i get it reduced? Also anyone else been hit with this 5% charge as I have been told there computers are spiting out all types of made up fines and charges.

Thanks in advance.

A.J

[Paul Coleman]

Hi Guys,

Having a bit of an issue with the tax man atm and finding it hard to see the light.

For the year ended april the 6th 2009 on turnover of 32 - expenses & allowance - a profit of 21 I'm having to shell out with the two payments a whoping 9,500 45% of my profit by October. Also I have paid the £100 fine and ongoing intrest. I've been told by them and my accountant to expect "about the same in January"    And just been hit by some 5% surcharge which I wasnt told about.

I Haven't fully worked out the year end april 2010 yet but have strong reason to belive that the profit might not be as much due to re-tooling and investing back in. I have tried to mention this to my acountant and the tax man and they dont want to know. nor tell me to much about how payments work or whats coming up.

Can anyone put to me in a simple answer how this whole paying up front thing works and whats gonna happen in January as im getting close to either shuting up the shutters and flying a new flag. Or going to find a bridge 

Is it possible to be overpaying? and can i get it reduced? Also anyone else been hit with this 5% charge as I have been told there computers are spiting out all types of made up fines and charges.

Thanks in advance.

A.J

That £9.5k bill doesn't sound right to me either - unless you had a big jump in profits from the previous year.  Normally, if there was no "payment on account" due, the profit on £21k would be (very roughly) in the region of £4k.  One of the problems with "payments on account" IMO is that it is all lumped into the January payment.  It is usually more expedient having a gradual rise in profits year on year so that the payments on account aren't too large.  I must admit to not fully understanding the system myself but that is the general gist of it.
Another issue might be the way you and your accountant calculated profits.  Is it possible that your accountant capitalised some of your expenses - meaning that the tax relief would be spread over a number of years rather than just in the year of purchase?
As for the 5% surcharge, I believe that usually occurs if you haven't paid the January 31st bill by the end of February.  The £100 charge is usually for not making your tax return by their deadline.  This used to be January 31st but I think it has changed since electronic submissions began in earnest.
The person you really need to talk to about this is your accountant.  This seems to be a big part of the problem as he/she sounds like they are a very poor communicator.

[darren clarke]

21 grand that was left was this your wage?

u had a turn over of 32 grand,  after expen and allowance u was left with 21 grand  does this money include your wages, in not pay your self more and start buying gear to bring your tax bill down

ur accountant sounds crap, as any decent account would tell you how to pay less tax,   the problem i see with wc when doind accounts is they go at the end of the tax year and then are worried about how much tax they pay,  you shoudll know what u r roughly making monthly, so you can tell months in advance if you need to invest in your business

all the tax man will say is you should have it saved as you have made it, even if you shut down u will get a tax bill

[Sunshine/Cleaning]

£21k after expenses and allowance means you are taxed at 20% plus 8% class 4 so 28% of 21K = 5.88k that is then split into 2 payments usually however the first year you have to pay it all.
Plus half of the amount 'on account' = 8.82K due.

The following year you pay the difference due in Jan + half of the actual then the other half of the actual in July.

You are not paying 'up front' as you have already earnt the money you pay tax on. You had a year and a half without paying tax.

I commented a couple of months ago that anyone starting should put aside 45-50% of turnover for expenses and tax, the poster said he would deal with it when the bill arrived.

Daft IMO.

It sounds like you owe what they say. Have you spent the money?   

[Smudger]

I agree with Stuart - this is my understanding of Tax as well - you are not paying up front.

if you were fined for late tax forms then you need a new accountant as they would be well aware of deadlines and def. be explaining how tax works for you.

so, go back to the accountant if they submitted your forms late then they owe you the £100 then change to someone more helpful.

Darran

[darren clarke]

think ur self lucky there was someone on here with a £30 grand bill  who had spent the money

[Smudger]

Has your accountant factored in your 6.7K allowance ??


so 21 k profit less tax allowance = 14.3 ( approx ) ??

Darran

[Jack Wallace]

I dont understand tax and also got myself in a right mess a couple of years ago, even though I have a good accountant my lack of "office skills" meant I got a little behind.
I employed a woman who understands tax, PAYE, and everything else concerning my day to day finances.
She works 3 hours a week and is the best £36 a week i spend. My company has gone from strength to strength as I am now able to concentrate on what I do best.
I am sure you will get through this and once you do I would very seriously think about getting some help.
We are not all good at everything so employ someone to help in the areas that let you down.
Good Luck.

[Sunshine/Cleaning]

Has your accountant factored in your 6.7K allowance ??


so 21 k profit less tax allowance = 14.3 ( approx ) ??

Darran

He said in the first post that the £21k was after expenses and allowance.

[Sunshine/Cleaning]

I dont understand tax and also got myself in a right mess a couple of years ago, even though I have a good accountant my lack of "office skills" meant I got a little behind.
I employed a woman who understands tax, PAYE, and everything else concerning my day to day finances.
She works 3 hours a week and is the best £36 a week i spend. My company has gone from strength to strength as I am now able to concentrate on what I do best.
I am sure you will get through this and once you do I would very seriously think about getting some help.
We are not all good at everything so employ someone to help in the areas that let you down.
Good Luck.

Good Idea for anyone to do.

[Smudger]

oopsss

Darran

[john tomkins]

u had a turn over of 32 grand,  after expen and allowance u was left with 21 grand  does this money include your wages, in not pay your self more and start buying gear to bring your tax bill down

I can understand "buying more gear" as you put it, but as my accountant says" don't buy unnecessarily just to bring your tax bill down"  You'd need to spent £5000 just to save £1000 ish tax.

As for the "pay your self more " how  is that gonna save you tax.... don't you pay tax on earnings anymore?

[LQQK]

I can understand "buying more gear" as you put it, but as my accountant says" don't buy unnecessarily just to bring your tax bill down"  You'd need to spent £5000 just to save £1000 ish tax.

Ive never got that either.

[darren clarke]

it all depends on what the 21 grand is,  is it profit after paying your self or is it your wage?,

becasue a lot of people who are self employed earn money take out expensise (not wages) and what is left is theres,  then a lot get screwed over by the tax man

because if it is profit then it should still be in the bank and shouldnt be a problem to pay the bill

[Central Window Cleaners]

If it was me I would take the 21K  as a divedent and only something like 20% on it which would only be 4.5k, much better than a 9k tax bill

[Sunshine/Cleaning]

It's obviously spent and not 'profit' in the bank. If he paid himself a wage he would pay weekly his tax. Plus I thought you could only take a dividend if you were LTD. Even then you pay tax on the company profit as well as your wage.

As for spending on equipment, thats just daft as the tax year he is paying tax on is 08-09 so anything spent now or even 09-10 will have to come off that year.

[darren clarke]

It's obviously spent and not 'profit' in the bank. If he paid himself a wage he would pay weekly his tax. Plus I thought you could only take a dividend if you were LTD. Even then you pay tax on the company profit as well as your wage.

As for spending on equipment, thats just daft as the tax year he is paying tax on is 08-09 so anything spent now or even 09-10 will have to come off that year.

so basically he need to pay the tax on his wages  and he hasnt saved it,  then he is screwed,  i think he is finding out he reason a lot of business close down in there second year

[Sunshine/Cleaning]

I think you might be right! Why folk dont think about saving it or even paying it weekly up front I dont know.

[bumper]

just do what i do fill in the under 15000 form and say you earn 4000 you pay no tax and no national insurance, i put on gross then outgoings  then profit bobs your uncle job done no accountant. No tax

[Glen Bullivant]

just do what i do fill in the under 15000 form and say you earn 4000 you pay no tax and no national insurance, i put on gross then outgoings  then profit bobs your uncle job done no accountant. No tax

and go to prison for evasion when they catch you. unless of course you DO only earn £4k