Self employed income tax

Upthecreekwithnopaddle

Heaven knows why I'm posting here, Im not entirely sure what I am asking or even if there is an answer.

My husband is self employed, work has more or less been non exisitant for around 6 months for him (along with most folks). We have coasted along, we took a 3 month break from our mortage in a bid to save up his now overdue income tax payment (£1400) the final half being due at the end of January. He brought home £15000 last year, it will obviously be less this year. We are in reciept of Child taz credits as we have two young children, whom i care for.

The overdue letter arrived yesterday from the Inland Revenue, up until now we've always managed but I'm stumped now. I dont know how to pay this bill that we should have covered. I've considered selling our house to clear it. We have no outstanding debts, other than a a bank loan that has around 1k left on it. We've no credit cards or store cards. I contacted out bank to see if they would lend us an additional lend, our current loan is at 6.9% a good rate, any additional would be at 24.5% from Lloyds, and I'd not be able to pay that.

The only alternative is to sell this house, we bought it in 2007 as our second home for 175000, im pretty sure its lost alot of value since then, as most houses have. My Mortgage is £123000. So even if the house is worth 135k, I can still sell it, pay the 3k income tax bill he has and then sadly find somewhere to rent. Madness.

Im not sure what Im asking, whether anyone has been in this stupid position of their own making I guess.

chalkie99

Could you clarify something?

When you say you bought your house as a second home do you really mean a second home as in what most people mean, i.e. you have two houses, or do you really mean you own one home and it just happens to be the second one you have owned?

That is going to make a big difference to your situation.

Also, what line is your husband in?

Upthecreekwithnopaddle

Oh no, I meant this is my second property. Sold our first home to buy this one. He is a self employed Satellite and aerial installer. The company he has his franchise with has recruited heavily in the last 6 months in order to prepare for the influx of work when the country gradually moves over to digital viewing, but as it stands the last 6 months of work has barely covered us.

Sorry I confused you

chalkie99

I'm sure someone will be along shortly with better advice but my initial thoughts are that far from being Upthecreekwithnopaddle you are in a position many here would be enviable of . It really doesn't seem so bad.

So your husband has bought into a franchise? And the franchisor has sold so many franchises that there is not enough work to go around?

If this was done on the basis of the digital switchover, what happens when the changes are completed? Presumably you only rely on a very short busy period when your actual area changes?

Maybe it's time to re-assess his skills and see if he can earn a wage doing something else.

Upthecreekwithnopaddle

I only own this house, Im not making myself clear I guess :S I wish it was an enviable position

tyllwyd

Before you do anything else, give HMRC a ring and see if you can set up a payment arrangement with them.

http://www.hmrc.gov.uk/pbr2008/business-payment.htm#pay

Elaine_Wilson

I cant help with how to pay but I think you need to clarify what the liabilities actually are. Does he draw up his accounts to the 5th April each year (or 31st March which is basically the same thing)?

I ask because the £1,400 which was due on 31st July was in fact the second instalment for 2008/09. This payment would have initially been based on your 2007/08 liability.

Have you completed the 2008/09 return? If not, do this immediately to see how the actual liability compares with the payment on account. It may reduce it, of course but cannot increase it. Any balance would be due next January.

January is the time when you pay the first instalment for 2009/10 and as earnings are greatly reduced you will be able to reduce this payment as well.

Sorry if you have this all sorted out already but your post did nat make it clear.

Upthecreekwithnopaddle

chalkie99 wrote: »

So your husband has bought into a franchise? And the franchisor has sold so many franchises that there is not enough work to go around?

If this was done on the basis of the digital switchover, what happens when the changes are completed? Presumably you only rely on a very short busy period when your actual area changes?

He's been in the line of work for 5 years or so and always coped, its just the last 6-12 months.

chalkie99 wrote: »

Maybe it's time to re-assess his skills and see if he can earn a wage doing something else.

I agree, he's applied for an employed position with Sky as a Senior Engineer and was acecpted but their recruitement programme is staggered so you basically wait for a position to become available. Not ideal.

Upthecreekwithnopaddle

Elaine_Wilson wrote: »

I cant help with how to pay but I think you need to clarify what the liabilities actually are. Does he draw up his accounts to the 5th April each year (or 31st March which is basically the same thing)?

I ask because the £1,400 which was due on 31st July was in fact the second instalment for 2008/09. This payment would have initially been based on your 2007/08 liability.

Have you completed the 2008/09 return? If not, do this immediately to see how the actual liability compares with the payment on account. It may reduce it, of course but cannot increase it. Any balance would be due next January.

January is the time when you pay the first instalment for 2009/10 and as earnings are greatly reduced you will be able to reduce this payment as well.

Sorry if you have this all sorted out already but your post did nat make it clear.

Yes thats right, the 1400 is from 08/09 and yes he does his accounts every April.

the_money_pit

Have you tried the Time To Pay helpline, you should get the number on HMRC's website. they are supposed to help you find a way to meet your payments.