Quick Q: Shall I pay in chex today or next week?

Seaxwyn

Hi there

I'm self employed and have just received two cheques this morning. As this is the last day of the tax year, I'm wondering whether if I bank them next week, will I be able to count the income in the next tax year, ie postpone paying tax on it til 2008?

Or do I have to declare it as 06-07 income as I did the work in that year?

Thanks for any advice you can give.

Bean_Counter

On the whole, you are taxed on the money when earned, not when paid. There a few exceptions.

Assuming you are one of the many, pay them in today (Friday and Monday are bank holidays of course), so will clear quicker.

Seaxwyn

HI Bean Counter

Thanks for that. I fill in my own Tax Return and the Inland Revenue doesnt know when I earned it. In previous years I've taken it as the year I receive the money is the one I declare it. However I've never had a payment so close to the year end before.

malcindebt

Although the revenue do not know when you earned it by just looking at your tax return, if you were selected for an Enquiry and asked to forward all your invoices, that would show them what work you had invoiced for in the relevant year.

My advice would be to show it in the year you earned it. it really isn't worth the hassle should you get selected.

Seaxwyn

Thanks Malc - I'll take your advice and put the income down as this year's.

Just out of interest, do you know how they select people for an Enquiry?

malcindebt

Unfortunately not. thats one thing we don't get told in the customer service part, for obvious reasons.