ChatterBank0 min ago
Cant afford my tax bill!!
7 Answers
I am a childminder who doesnt earn a great deal of money. Just done my tax return and got the self assessment statement through telling me I owe £1400 which is what I expected due end Jan 2012. But on top of this I have a payment on account of a further £701 to also be added to that by the same date then it says I've got another £701 to pay by end of July 2012 too. So this means I am paying next years tax upfront before Ive even earnt the money. As my profit was less than £5000 for the whole year how am I expected to put away money for a tax bill when I havent yet got it? Am going to phone them next week but is this right? I am worrying now cos Ive got to find double the amount I expected and as it stands now 2 of the children in my care are leaving in a few months and only 1 has been replaced. I read that you can reduce the payment in account but if you get it wrong you will be charged interest. Can anyone offer any advice?
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Your figures don't add up!!!!
What other income have you got? If your total income for the year was less than £5000 you'd have no tax to pay at all. If you've already used up your personal tax allowance through other employment (or through other sources of income) your tax bill on 'less than £5000 profit' should still be under £1000 unless your total annual income exceeds £35,000.
More information please!
Chris
What other income have you got? If your total income for the year was less than £5000 you'd have no tax to pay at all. If you've already used up your personal tax allowance through other employment (or through other sources of income) your tax bill on 'less than £5000 profit' should still be under £1000 unless your total annual income exceeds £35,000.
More information please!
Chris
Assuming that you only started during the tax year 6th April 2010 to 5th April 2011, the £1400 that you owe will be for that tax year, as you would appear to have made no payments on account for this period.
The 2 installments of £701 each due in January 2012 and July 2012 will be for the tax year 6th April 2011 to 5th April 2012, by which time you will have received payment and hopefully put adequate funds away to pay the tax bill. Although with Self Assessment the final tax settlement is made in arrears, it is always advisable to save some of your income to cover the Tax and National Insurance that will be payable eventually.
When you make your Self Assessment return there is a section where you can request to make smaller or higher payments on account, but it is better to err on the higher side, then you can't be fined and can earn a small amount of interest instead.
The 2 installments of £701 each due in January 2012 and July 2012 will be for the tax year 6th April 2011 to 5th April 2012, by which time you will have received payment and hopefully put adequate funds away to pay the tax bill. Although with Self Assessment the final tax settlement is made in arrears, it is always advisable to save some of your income to cover the Tax and National Insurance that will be payable eventually.
When you make your Self Assessment return there is a section where you can request to make smaller or higher payments on account, but it is better to err on the higher side, then you can't be fined and can earn a small amount of interest instead.
The profit of £5000 is the amount I am paying tax on less my expenses and personal allowance.
I have been childminding since Feb 2009 so obviously in the first tax yr made a loss an last year I didnt make any payment on account no.
My point now though is that they are expecting to pay 2 lots of tax, and presuming my income will be the same for the next tax yr when it may well not be. I cant afford to pay tax on money I havent yet earned. Its hard enough putting it way for the money I do earn!
I have been childminding since Feb 2009 so obviously in the first tax yr made a loss an last year I didnt make any payment on account no.
My point now though is that they are expecting to pay 2 lots of tax, and presuming my income will be the same for the next tax yr when it may well not be. I cant afford to pay tax on money I havent yet earned. Its hard enough putting it way for the money I do earn!
You haven't got to pay it yet though, tigs - the Jan 2012 end date is for the tax year just finished (2010-11), and you've got the money for that - the £701 to be paid by July is the first instalment for the current tax year which started last April. If you are already putting tax money aside in the current year, then I don't see why having to pay £701 in 10 months' time is a problem?
That is the way self assessment works for everyone tigwig (unless the tax bill is under £1,000 in which case the requirment for payments on account in advance is waived). You're not being asked to do anything payment wise that everyone else isn't.
You are also not being asked to pay tax on money you haven't earned yet. You are being asked to make a payment in January 2012 and again in July 2012 of tax on income for the tax year ended April 5th 2012. The first payment (of half the expected tax) isn't required until 10 months into the year and the second is after the year end. You have earned the income by then to pay the tax and you are still getting more "time to pay" than those of us on PAYE do. If you expect the profits of the business to fall next year you can ask for the payments on account to be reduced but be aware if you later submit a return showing that in fact they shouldn't have been, or were reduced to far, they may well charge interest as a result.
You are also not being asked to pay tax on money you haven't earned yet. You are being asked to make a payment in January 2012 and again in July 2012 of tax on income for the tax year ended April 5th 2012. The first payment (of half the expected tax) isn't required until 10 months into the year and the second is after the year end. You have earned the income by then to pay the tax and you are still getting more "time to pay" than those of us on PAYE do. If you expect the profits of the business to fall next year you can ask for the payments on account to be reduced but be aware if you later submit a return showing that in fact they shouldn't have been, or were reduced to far, they may well charge interest as a result.
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