self assesment tax

jesmin45

My son started his own business Sept 2010. He informed Inland Rev etc. He has been putting money aside for tax and NI. Can he set up a DD to pay NI monthly? Also can you set up a payment scheme for tax each month, so at least you are not hit with a hefty tax bill. When will he pay his first tax bill and what happens, do the IR automatically send a tax assesmemt form (he will do this on-line) so am I right in thinking this will be due 1st Jan 2012? Do you get a tax bill twice a year?
He has an accountant and I am doing his books.
He has just received a tax rebate of £400 which we presume is from his previous employment.

Many thanks

John_Pierpoint

Let us start at the beginning:

Here is the step that triggers the taxation of self employed people:

http://www.hmrc.gov.uk/working/intro/class2.htm

Did you son comply with this (if he thought he was "exempt" because of low turnover and low profits, he should have applied for an exemption certificate).

antrobus

jesmin45 wrote: »

He has an accountant

Ask the accountant. Answering such questions is what they get paid for.

PlutoinCapricorn

It is always worth spending some time on www.businesslink.gov.uk and the HMRC website.

When you say he informed the IR, do you mean that he registered with HMRC as a sole trader? If so, he should have received a pack containing a Direct Debit form for Class 2 NI contributions, which are around £2.50 per week or £12 per month, together with an exemption form for completion if he thinks that he will earn less than around £5,000. The figures change each year.

http://www.hmrc.gov.uk/working/intro/class2.htm

A Class 4 levy may also be payable, depending on the profit size:

http://www.hmrc.gov.uk/working/intro/class4.htm


The first self assessment will be for FY April 6th 2010 to April 5th 2011, and the deadline is in January 2012 but it is best not to leave it until the last minute.

If he has a job that uses up his personal allowance, then he should be setting 20% aside for income tax. If not, he will only need to pay tax on profit above the personal allowance.