Newly self-employed & some tax questions?

chrismac1

If you've read that link it's probably about as clear as very muddy mud into which a vast consginment of mud has just been dropped. Rest assured that I have clients who've been self-assessment for over 10 years (8 of them for other accountants before the HMRC stooges start saying it's just me that can't explain things properly) who were still calling me last month to figure out what was going on.

Once you are in the system, the 31 January 2012 payment was actually 2 payments added up:

1. The final bill for 2010-11 tax year now that the tax return is filed and the final tally is known.
2. The first instalment for 2011-12 which defaults to 50% of last year's unless you put something higher or lower in.

My advice to all SA clients is to file get their accounts in early and file tax returns early. That way the exact payments you are required to make are known months in advance. It does not make a big tax bill any smaller, but for many businesses 31 January is about the worst date in the whole year to try to find a large sum, naturally this will not have occurred to anyone in HMRC who set up the system. At least if you know it is coming you can plan for it, if necessary defer non-essential spends on your business if it's a seasonal one until trade picks up again.

Your point about fluctuations is highly topical. I have one consultant client whose taxable income went from £80k to under £30k as she was largely selling to the public sector. The problem is that not many people can take a £50k drop in lifestyle in their strides, and set aside £10k or £12k for a tax bill based on the £80k.

I am sending you some useful links on what you can claim for. I think if you find yourself a good local accountant he or she will probably pay for their fee in year 1, based on your post. The first step would be to identify all expenses for the 2010-11 year and re-submit the return, assuming you do it yourself in the next few weeks.

Mikeyorks

chrismac1 wrote: »

If you've read that link it's probably about as clear as very muddy mud into which a vast consginment of mud has just been dropped.

I was assuming a modicum of intelligence from, at least, the OP.

Sammyantha

Thank you all so very much. And Chris that link you sent is really helpful. Mikey I'm pretty sure I will owe some kind of fine as I registered after the 3 months (i actually started in march 2011, and hrmc know this as i was honest). Still plodding my way through the vast mountains of information on self-employment tax and trying to make sense of it. I think I will need to see an accountant, if only to find out what I can/ can't claim for. I was thinking if I keep my head down and dont claim for much i'd be less likely to be audited, but talking to others it doesn't seem this is always the case. Will let you know how I get on.

Many thanks

suso

chrismac1 wrote: »

If you've read that link it's probably about as clear as very muddy mud into which a vast consginment of mud has just been dropped. Rest assured that I have clients who've been self-assessment for over 10 years (8 of them for other accountants before the HMRC stooges start saying it's just me that can't explain things properly) who were still calling me last month to figure out what was going on.

so in reality you have had clients for at least 3 years and they still don't understand whats going with regard to payments on account.

perhaps you should not mention the word tribunal to them at every meeting.