How much tax?

Quimby

Hi, I hope someone can give me a bit of advice

I'm self employed and every month I work out my monthly profit and put aside 30% of that in anticipation of my tax bill

To the end of September, my 6 month profit total is £7.8k, and in my tax account I have £2.4k

However if my personal tax free allowance is £6k, should I only need to have put aside 30% of the £1.8k over that allowance, i.e. £540?

If that's the case, that will be most welcome as it means I have nearly £2k spare cash to spend

Thanks in advance

Rolo_Tomasi

Your personal allowance is for the year therefore if the next 6 months continue the same you would have a profit of £15,600. You would pay income tax at 20% on £9125 of this (£1825) and national insurance at 8% on £9885 (£791). Therefore the total due for the year would be £2616 - so you almost have enough already!!

This tax would be due to be paid by 31 January 2011 but on that date you would also have to make a payment on account of the following years tax bill of £1308. Therefore if everything stays the same you will have just under £4k to find by 31/01/11 with a further £1308 to pay by 31/07/11.

I don't think you should spend any of your savings but I do think you can reduce the amount you are putting by to 20% of your profit.