Our website uses cookies to store information on your computer. You may delete and block all cookies from this site, but parts of the site will not work as a result. Find out more about how we use cookies.
(Do not show this message again)
Shout99 - News matters for freelancers
Search Shout99 - News matters for freelancers
(Advanced Search)
   Join Shout99  About Shout99   Sitemap   Contact Shout99 25th May 2018
Forgot your password?
Shout99 - Freelancers, FO35, Section 660
New Users Click Here
Shout99 - Freelancers, FO35, Section 660
Shout99 - Freelancers, FO35, Section 660
Front Page
News...
Freelancers' Shop...
Ask an Expert...
Letters
Direct Contracts
Press Links
Question Time
The Clubhouse
Conference Hall...
News from Partners
Accountants

Login
Sitemap

Business Links

Shout99 - Freelancers, FO35, Section 660

Freelancers' Shop

Personal Financial Services
from ContractorFinancials

Mortgages

Pensions

ISAs

Income protection

... and more special offers for Shout99 readers in the Freelancers' Shop

Shout99 - Freelancers, FO35, Section 660
  
Shout99 - Freelancers, FO35, Section 660

News for the
Construction Industry

Hardhatter.com - News for small businesses in the construction industry

Powered by
Powered by Novacaster
Advertisement
Brookson

Taxpayers urged to budget for extra tax payment
by Susie Hughes at 13:00 16/01/18 (News on Business)
While the end of January 2018 deadline for submitting your 2016/17 tax return and paying your tax bill is well known, the experience of the Low Incomes Tax Reform Group (LITRG) is that many newcomers to Self-Assessment fail to realise they may have to pay some money in advance towards their next tax bill on that day, too.
‘Payments on account’ (POAs) are payments made towards your following year’s income tax (and Class 4 national insurance contributions bill, if you are self-employed). If your tax bill for 2016/17 is more than £1,000, you may have to make POAs for 2017/18. However, if more than 80 per cent of your income is taxed at source, for example under PAYE or the Construction Industry Scheme (CIS), then you will not have to make such payments.

When calculating POA due for 2017/18, you take your tax bill for 2016/17 (not including Class 2 national insurance contributions, capital gains tax liabilities or student loan repayments) and divide this figure by two. The resulting number is each POA for 2017/18 – one due on January 31 2018 and the other due on July 31 2018.

POAs will be taken off the tax due from your next tax return. If you still have tax to pay for 2017/18 after you have made your POAs, you must make a 'balancing payment' by 31 January 2019. If your POAs prove to be more than your eventual tax bill for 2017/18, HMRC will refund the difference to you.

Advertisement
LITRG Chair Anne Fairpo said: “Payments on account are intended to help you spread out your tax bill but are easily overlooked. In particular, many newcomers to self-assessment fail to factor in these ‘payments on account’ when budgeting for their first tax bill and are shocked when they owe more money than expected.

“If you think your tax bill will be less for 2017/18 than 2016/17 because (for example) you had less self-employed income, then it is possible to ask HMRC to reduce your payments on account.

”You need a reasonable estimate of the amount you will owe in 2017/18 in order to reduce your payments on account. If you reduce them too much, you could face interest charges, and even a penalty if the claim was fraudulent or negligent.”

Reducing payments
Payments on account can be reduced by filling in a SA303 form or, if filing online, by logging into your HMRC online services account and clicking ‘Reduce my payments on account’ or via your personal tax account.

Anne Fairpo said: “You must tell HMRC if you want to reduce your payments on account. If you simply pay a lower amount to HMRC, this will show on their systems that you have not paid enough and it is likely that they will contact you and you could be liable to pay a fine.”

If you cannot reduce your payments on account but will struggle to pay them as they are, ie in two lump sums, you can set up a budget payment plan and make regular payments in advance to spread them out a bit more. Going further, if you cannot pay them, full stop, contact HMRC as soon as possible, and certainly before the due date of payment, to discuss your case as they may be able to give you more time to pay.


--
If you wish to comment on this article, please log in and use the Reply button below. Registering is free and easy - see 'Join Shout99'.
-
Susie Hughes © Shout99 2018

Printer Version

Mail this to a friend

Copyright 1999-2018, Shout99.com | All Rights Reserved
Privacy Notice and Terms of Use
 

Advertisements
advert
advert
advert
advert