Tax Returns & payments on account

suestew

Hi

My accountant has just finished my first tax return on rental income. On the statement (computation) they sent over it states that not only do I have to pay this years return by 31st Jan (I have no problem with this) but I also have to pay at the end of Jan half of next years TR followed by the other half in July next year.

I have asked if I can avoid this and just pay what I owe next year but they have said that if your liability will be similar to this year`s one, then they cannot do anything about the payments on account, but if you think that it will be lower they can take a look at it.

Now my income will be similar, other than the fact I have paid a big sum out for windows, but I am currently out of work, does this not get taken in to account?

I expect you will all say that I do have to pay it but it seems so unfair that you have to pay in advance

Thanks

Yorksboy

Hi

This is how I think it goes!

The return you have just completed is for The 2011-2012 Tax year, this wasfor rental income you had from April 2011 to March 2012 - this is due to bepaid at the end of January 2013.

The Payments on account (January and July 2013) are for the present tax year(2012-2013). This means that the first half due in January 2013 is for the taxon the rentals you received between April and October 2012. So you will bepaying tax on income you have already received, this follows for the secondpayment in July.

I'm open to being corrected if any tax knowledgeable people are on here.

suestew

Yorksboy thanks, that makes sense now.

ceeforcat

Yorksboy wrote: »

Hi

This is how I think it goes!

The return you have just completed is for The 2011-2012 Tax year, this wasfor rental income you had from April 2011 to March 2012 - this is due to bepaid at the end of January 2013.

The Payments on account (January and July 2013) are for the present tax year(2012-2013). This means that the first half due in January 2013 is for the taxon the rentals you received between April and October 2012. So you will bepaying tax on income you have already received, this follows for the secondpayment in July.

I'm open to being corrected if any tax knowledgeable people are on here.

Not quite - the payment in January 2013 is half of your previous years liability and is a payment on account of your eventual liability for the rental income profit during the period from 6th April 2012 to 5th April 2013, whatever that may be. The op may seem slightly annoyed by the large payment in January 2013 but should remember that rental income has been received since April 2011 without any tax ever having been paid - it is catch-up time!

suestew

ceeforcat wrote: »

The op may seem slightly annoyed by the large payment in January 2013 but should remember that rental income has been received since April 2011 without any tax ever having been paid - it is catch-up time!

you are right, I was annoyed but understand now why I have to pay it, thanks for confirming