Help please, finishing self employment and payments on account

Toothfairy4

Hi everyone, I was self-employed for the last 3 years (ended June this year). I am just filling in my 2011-12 tax return and wondered if someone can help me with how to work out how to reduce my payments on account for next year now that I am employed rather than self-employed?

Thanks

cb4fwh

Within the tax calculation summary part of the tax return, section 9 check the box entitled If you are claiming to reduce your 2011–12 payments on account, put ‘X’ in the box – enter the reduced amount of your first payment in box 10 and say why you are making the claim in box 16 overleaf.

You would put 0.00 in box 10, and free text in section 16 along the lines of

'I will no longer be self-employed in 2012/13, so on this basis I am making a claim to reduce payments on account.

Toothfairy4

Thank you thats very helpful. I was still self employed up until the end of May so shouldn't I pay some in advance? How would i calculate the figure if so?

cb4fwh

Not too sure about that one I'm afraid, but a quick call to the self-assessment helpline should clear that one up very easily...

grey_gym_sock

the PAYE income should first use up your personal allowance, then the basic rate band, and so on. so, assuming PAYE income is more than the personal allowance, you'll need to pay either 20% or 40% or 50% on the whole of your self-employed profit during this tax year, treating self-employed as your top slice of income.

if your self-employed profit this year is over £7,605, then you'll also need to pay NI class 4 NI on the excess at 9% (falling to 2% if profit exceeds £42,475).

add in any tax due on other kinds of income (other than employment or self-employment). e.g. anything not taxed at source, or if you're on higher rate, the extra tax on income with only basic rate paid at source (e.g. interest).

halve the total tax that will be due to get each payment on account.

be a bit careful, because if you underpay as a result of reducing payments on account, hmrc charge interest at quite a high rate. though i think they don't charge if you've paid a high enough proportion of the tax due (90%?).