Tax Bill

kmcly1234

Hi

My partner is self employed and this year we've had to submit a tax return for the first time.

We've been totally naive and didn't realise just how much it would come to as we thought his expenses would off set a lot of it. We also had no idea about the payment on account side of things so that added an extra £700 to the bill that we weren't expecting.

Basically we can't afford to pay the whole thing all at once. Has anyone else been in the same situation and what can be done? Thanks in advance. Please no comments about how we should have been prepared etc etc, we have put some money aside but really had no clue about the payment on account bit and genuinely just been a bit naive so obviously moving forward we will be more prepraped. We will be able to afford to make the second payment on account instalment in July, just struggling to pay the amount in full that is due this week.

laticsforlife

Firstly re: the Payments on Account (POA) for next year - do you expect next years profits to be higher or lower than this years - if lower, then you can ask for these POA's to be reduced.


Next, if the bill is too much to pay in one go ring HMRC up and ask for Time to Pay, they will work with you on this.

HappyMJ

kmcly1234 wrote: »

Hi

My partner is self employed and this year we've had to submit a tax return for the first time.

We've been totally naive and didn't realise just how much it would come to as we thought his expenses would off set a lot of it. We also had no idea about the payment on account side of things so that added an extra £700 to the bill that we weren't expecting.

Basically we can't afford to pay the whole thing all at once. Has anyone else been in the same situation and what can be done? Thanks in advance. Please no comments about how we should have been prepared etc etc, we have put some money aside but really had no clue about the payment on account bit and genuinely just been a bit naive so obviously moving forward we will be more prepraped. We will be able to afford to make the second payment on account instalment in July, just struggling to pay the amount in full that is due this week.

You can put it on a credit card or you could arrange an overdraft with the bank and use that.

If you can't get further credit and have unsecured debts you should make arrangements to pay less towards them so you can pay the HMRC instead.

If you do not pay on time you will have penalties and interest applied to your account. You can arrange to pay the outstanding amount over a reasonable period of time including the penalties and interest if you can't pay it all this week and have no way of raising the money.

TheCyclingProgrammer

You say you've been putting money aside - presumably you've been putting it aside since you started self employment? If you've been putting aside say 20-25% of all income then you should have put enough aside for the first payment on account as you're already 10 months into the tax year.

Have you simply underestimated how much to put aside? You say that you expected expenses to cancel most of it all out - that would mean your expenses almost equals your income such that you barely made a profit. Did you expect the expenses to be deducted from the tax owed? It doesn't work that way.

If you genuinely expect the amount of tax due for 2015/16 to be lower than 14/15 (you should have a good idea as there isn't long left to go) then you can ask HMRC to reduce the payments on account to what you expect it to be but make sure you get this right as if you lower them too much you could end up owing interest.

Your best course of action would be to either borrow the money or ring HMRC and arrange a payment plan.

Darksparkle

laticsforlife wrote: »

Firstly re: the Payments on Account (POA) for next year - do you expect next years profits to be higher or lower than this years - if lower, then you can ask for these POA's to be reduced.


Next, if the bill is too much to pay in one go ring HMRC up and ask for Time to Pay, they will work with you on this.

The payments on account are for this year's tax bill (2015/16) rather than next years