self employment tax return help

wrighty0__3

quick question for all of you that know and understand self employment tax returns. ive just been doing my partners online its her 2nd year, last year i didnt have any problems but this year ive come to the end of the tax return and im a little bit baffled by it all.


This section provides you with the result of your calculation.
Total tax, Class 4 NIC and Student loan due for 2010-11£1,402.56PlusFirst payment on account for 2011-12£701.28Payment due by 31 January 2012
This amount does not take into account any 2010-11 payments on account you may have already made or tax due for earlier years.

£2,103.84
Second payment on account for 2011-12 will be due by 31 July 2012
£701.28


thats the information im being given at the end of the return.

the things i dont understand, by my reconing we have:
the tax owed £1402.56. is this correct?
can be split into 2 payments? or rather will be?

where has £2103.84 coime from or got to do with it?

CLAPTON

You don't say the profit figure but lets assume 1402 is correct for the tax due for the tax year 2010 -11
this is payable by 31st January 2012

in addition they want a payment on a/c for the tax year 2011-12 (i.e the current year) also to be paid by 31st January 2012 of 701 (i.e. they are asssuming the same tax will be due for the tax year 2011-12 as was due for the tax year 2010-11)

so your total payment by 31st Jan 2012 will be 1402 (for 2010-11) plus 701 (for part of 2011-12) ie 2,103

and you then make a second payment on a/c for 2011-12 in july 2012 (and of course a final payment by 31 jan 2013)


tax isn't taxing is it?

wrighty0__3

Tax is more than taxing, it's a joke, why do you have to make a payment in advance for next year when she doesn't submit her returns until the end of the tax year, so basically by next year July shell of paid £2704?

CLAPTON

you need to direct that question to your MP
however, in comparision to people on PAYE, the taxation payment schedule for self employed might be consider quite generous.
the first part payment is made by 31/jan 2012 for the tax year 2011-12 so she has only topay half the tax when she will have had 10/12 th of the income by then

anyway that's how it is.

ceeforcat

You say that last year you had no problems and I presume, therefore, that your partner has paid tax before. What was the position re tax on the return submitted last year? Was there a payment made for 2010/11 in January this year with another one to come on 31st July? If so, these need to be deducted from the amount of £1402.56.

wrighty0__3

No there wasn't a payment to b made in January for this tax year, thats why I don't understand it, although last year wasn't a full tax year for her, it all just seams abit misleading but, hey if that's what's gotta happen then that's what's gotta happen, cheers for clearing this up because the hmrc website is far from clear

ceeforcat

OK - your partner started self employment in or around late 2009. The tax due for 2009/10 must have been below the amount to trigger payments on account for 2010/11. You now have to think of this logically:

Your partner, by 31st January 2012, the date of the payment due of £2103.84, will have been self employed for the best part of two and a half years and only paid the small amount of tax due in January 2011 - one payment only. No tax was paid in January 2010 and July 2010, July 2011. The system for self employed tax is not easy to understand at commencement but you must understand that there had to be a time when your partner 'caught up'.

Make-it-3

You need to grasp the concept of 'payment on account'.

When you first become self employed you have a grace period when you earn and don't pay tax, chiefly because the tax office have no idea what you're income will be and therefore have no idea of what to tax you. After you have submitted your first return they estimate what you are earning in the current tax year based on your income from your tax return. They then bill you this amount as a 'payment on account' for the current tax year, which you pay in two installments. At the end of the next tax year this is tallied with your tax return ie what you actually earned and you either make up the difference if you have made more profit or they will refund you if you made less and they then recalculate and estimate your 'payment on account' for the next year. And so on and so on.

wrighty0__3

ahhh makes more sense now, this is putting us in abit of a predicament, i wish shed of listened n banked the 20% on a weekly basis like i told her to and then we wouldnt be in this situation. looks like buying a house is being put further away :mad:

CLAPTON

wrighty0__3 wrote: »

ahhh makes more sense now, this is putting us in abit of a predicament, i wish shed of listened n banked the 20% on a weekly basis like i told her to and then we wouldnt be in this situation. looks like buying a house is being put further away :mad:

no 28% as tax is 20% and NI is 8%