[Paul Coleman]

Over the last several years, I have sometimes been caught short, so to speak, when it comes to paying my tax bill.  I usually have some of the money but often end up needing to pay the remainder with a credit card or agree a payment plan with them in arrears.  I don't want it to be this way any more.  Unfortunately, HMRC don't seem to be too flexible when it comes to taking direct debits in advance.  For window cleaners, obviously the income is extremely variable and a direct debit for a fixed monthly amount does not fit the bill - especially if working on a tight budget.  So I have resolved to make some changes.  I have a BACS payment set up from my account to their's with my reference number included.  This works fine as I've been using it for ages.  What I intend to do from now on is each day, I will make a BACS payment of 15% of whatever I get paid by the customers.  Although my tax rate is 20% and there's about 9% class 4 NI (+ the £2-£3 class 2 NI per week), I reckon that 15% should just about do it (perhaps a small shortfall on low expenditure years).  Bear in mind that I'm paying in 15% of paid turnover.  Obviously there will be a few grand expenditure each year and there is also the usual tax free allowance.  15% might be a little bit light but by rounding up to the next fiver each time I think I should just about cover it.
They may not like small, daily payments but I'm afraid that I have to do it the best way for me.
I wasn't paid much today because hardly anyone was in.  I sent a BACS of £8 (only decided to round up the fivers after I sent it).
If I owed less money, I would happily put it away in an interest bearing account.  However, my budget is tight and I don't trust myself to leave it there.
Any thoughts on this?

[Erithwc]

I put 20% of every thing i earn away in one sivings account for tax, accountant and NI

Paul

[♠Winp®oClean♠]

I put a fixed amount away each working week without fail. A couple of years ago I got a new van & claimed AIA on full amount in that year + some expensive poles. The year after I had a much smaller Tax/NI liability but I still carried on putting the same amount away & now I am actually approx 12 months in front!

I also work a month in front of all my living & working expenses. This way I have zero worries/issues with my cash flow.

[♠Winp®oClean♠]

I put a fixed amount away each working week without fail. A couple of years ago I got a new van & claimed AIA on full amount in that year + some expensive poles. The year after I had a much smaller Tax/NI liability but I still carried on putting the same amount away & now I am actually approx 12 months in front!

I also work a month in front of all my living & working expenses. This way I have zero worries/issues with my cash flow.

I intend to get back to this myself one day.  Unfortunately life sometimes throws up curve balls.  A few years ago I was too trusting in a relationship and it cost me a LOT of money.  A few months after leaving her, I had a bad illness that required lengthy treatment and meant I could only work part time for 6 months.  Although I have long since recovered physically and emotionally, the financial recovery has taken rather longer.  So, perhaps for another 2 - 3 years, I work hard and live tight.  My time will come again 

I've followed your posts for years Paul (shiner). It must have been very hard for you recovering from these issues- you've been at it some time & I look forward to the day you are "free" of it!

Don't get me wrong, it has taken serious self-discipline to get myself to this "comfortable" position!

[Dan crowther]

If you register for the tax self assessment online services (www.gateway.gov.uk) you can make payments on account to go towards the next bill. I pay a set amount each month through direct debit or standing order (cant remember which without looking) which will hopefully cover (or go a long way towards) the bill. You can vary the amount you pay each month (or whatever period you choose) and even get it back if you need it. This obviously defeats the purpose of it but it's a useful feature.
I do my tax return in April and am given the exact amount needed to pay (payable the next jan/July) so can split the amount owed into monthly amounts. I never have a big amount to pay all at once now.

[mark dew]

Paul, don't bother phoning the taxman if you are late or in arrears with them. They try to make you feel bad on the phone.
Better to say nothing and you shouldn't hear anything for awhile, which will give you time to catch up. From personal experience.

[robertphil]

are you a fulltime house window cleaner Paul?  if so your income shouldnt be very variable. unless youve a ragbag customer list who dont pay normally.  best to get rid of bad payers and find steady paying types is my experience

[Ian101]

Im doing my tax this weekend.

My business year runs April to April same as tax man.

Last year put van and equipment all thru in 1 go so got a bit back off tax man 

This year I will be paying him.

My understanding is that I have to submit by end of Jan 2013 for years 2011 - 2012 so hopefully will have it saved up by Jan 2013.

Will also prob get hit for the bit in advance as well unless my tax bill is under a grand .... I think that last bit is true ??

Last week opened a savings account to start putting money to 1 side for taxman and any unexpected expenses.

[bobplum]

you can pay by direct debit,i pay every week
but i think there are some restrictions to it

[AuRavelling79]

I pay a standing order monthly.

Why not set that up at a relatively low amount and put a similar amount directly into a monthly savings cash Isa that you can access instantly if you have a cashflow issue?

[sunshine windows]

I phoned the tax office last year to try and set up a regular payment plan and was told i could'nt because i had an outstanding payment to make before they would consider it. Haven't bothered calling back but think i will because it's very difficult to leave the saved tax money alone 

[♠Winp®oClean♠]

I phoned the tax office last year to try and set up a regular payment plan and was told i could'nt because i had an outstanding payment to make before they would consider it. Haven't bothered calling back but think i will because it's very difficult to leave the saved tax money alone 

That's correct. You cannot set up any payment method of the topic's nature if you have any outstanding debt to them.

[tompoole]

I pay 30% into premium bond per month  then when HMRC want money
I cash in bonds and pay it, there's always a nice little pot left
For a treat :-) I even got £100 prize last month ...

[Nathanael Jones]

I have a monthly standing order which is set a bit above what I expect to owe - that way at the end of the year I get a nice refund which is always enough to cover the accountants fees.

[edward1]

paul ,your running a buisness,get real m8.

put a third of your money aside and pay your tax.a third will leave you with a surplus .your not a kid

[G Griffin]

I phoned the tax office last year to try and set up a regular payment plan and was told i could'nt because i had an outstanding payment to make before they would consider it. Haven't bothered calling back but think i will because it's very difficult to leave the saved tax money alone 

That's correct. You cannot set up any payment method of the topic's nature if you have any outstanding debt to them.

And you can't claim an overpayment without cancelling your payment plan. You reclaim your money and then set it up again.......eyes roll.

[Ian101]

I pay 30% into premium bond per month  then when HMRC want money
I cash in bonds and pay it, there's always a nice little pot left
For a treat :-) I even got £100 prize last month ...

thats a good idea .. better return than any savings account - probably plus if I won a million quid I would have no taxman worries at all 

[tompoole]

 

[*Hector*]

I pay 30% into premium bond per month  then when HMRC want money
I cash in bonds and pay it, there's always a nice little pot left
For a treat :-) I even got £100 prize last month ...

thats a good idea .. better return than any savings account - probably plus if I won a million quid I would have no taxman worries at all 

That is why I buy lotto tickets with mine.. 

It will all be worthwhile when I win tonight !!