Can I spend money put aside for tax? Have I over saved?

bobcratchit

I'm self employed and always put around 30% of my fee into a separate bank account to cover my tax bill.

I currently have around 18,000 in put aside money and want to know how i can guage if I've over saved and whether i can use any of the put aside money for a new boiler (for example)

My next bill is due 31st July 2016 and I owe £6,888 on balance payable. The next two bills will be due Jan 2017 and July 2017 and will be £7,808 each.

Is there a rough guide/calculator that tells you if you've over saved or not?

HappyMJ

bobcratchit wrote: »

I'm self employed and always put around 30% of my fee into a separate bank account to cover my tax bill.

I currently have around 18,000 in put aside money and want to know how i can guage if I've over saved and whether i can use any of the put aside money for a new boiler (for example)

My next bill is due 31st July 2016 and I owe £6,888 on balance payable. The next two bills will be due Jan 2017 and July 2017 and will be £7,808 each.

Is there a rough guide/calculator that tells you if you've over saved or not?

Yes you've over saved....nothing wrong with that.

You should save 9% of everything you earn in excess of £155 per week and 20% of everything in excess of £211 per week.

If you earn more than £827 per week the numbers change to 42% on the amount over £827 (assuming all weeks in the year you do earn more than £827 per week). If you do earn more than this you're better off setting up a limited company and paying 20% so ensure you don't earn this much as a sole trader.

It sounds like you've been saving what would have been the part that isn't taxed at all.

So....get the boiler fixed and don't worry about spending the money. It's cheaper to fix boilers rather than replace them so look into fixing it first.

bobcratchit

Thanks so much for that. Just an addendum to that though - what about NI contributions?
I pay Class 2 and Class 4 and my 30% I deem to roughly cover that. Does that seem about right?

[Deleted User]

bobcratchit wrote: »

I'm self employed and always put around 30% of my fee into a separate bank account to cover my tax bill.

I currently have around 18,000 in put aside money and want to know how i can guage if I've over saved and whether i can use any of the put aside money for a new boiler (for example)

My next bill is due 31st July 2016 and I owe £6,888 on balance payable. The next two bills will be due Jan 2017 and July 2017 and will be £7,808 each.

Is there a rough guide/calculator that tells you if you've over saved or not?

Just to clarify - do you owe the payment on 31st July, which is the second payment on account for 2015/16, plus a balancing payment of £6888? Or is £6888 the payment due on 31st July ?

Based on what you have said you would owe a balancing payment in January for 2015/16 as your payments on account for 2016/17 have increased.

bobcratchit

This is what I understand to be the case -

31st July 2016 ~ £6663.77 being the balance payable for 2015-16.

31st January 2017 ~ £7808.10 being the 1st payment on account for 2016-17.

31st July 2017 ~ £7808.11 being the 2nd payment on account for 2016-17.

Does that tally?

[Deleted User]

Based on that you would have paid £8952.44 as a first payment on account for 2015/16 on 31st January 2016. If not, something is wrong somewhere.

Dazed_and_confused

I have a feeling you're missing a balancing payment due for 2015:16 which would payable on 31:01:2017.

Also a bit confused why the payment due this July has changed from £6808 to just £6633?

Assuming you have submitted your tax return the easiest thing would be to log into your self assessment account and check your statement of account as I think this will show not just the July 2016 payment due but also any others which will be coming due in the future?

At a guess I think the balancing payment due in January 2017 will be between £1840 and 2290.

HappyMJ

bobcratchit wrote: »

Thanks so much for that. Just an addendum to that though - what about NI contributions?
I pay Class 2 and Class 4 and my 30% I deem to roughly cover that. Does that seem about right?

Yes the 9% is NI Class 4 and 2% of the 42% figure is also NI Class 4.

The £2.80 a week is negligible so don't worry about that.

[Deleted User]

Dazed_and_confused wrote: »

I have a feeling you're missing a balancing payment due for 2015:16 which would payable on 31:01:2017.

Also a bit confused why the payment due this July has changed from £6808 to just £6633?

Assuming you have submitted your tax return the easiest thing would be to log into your self assessment account and check your statement of account as I think this will show not just the July 2016 payment due but also any others which will be coming due in the future?

At a guess I think the balancing payment due in January 2017 will be between £1840 and 2290.

I think that you are thinking along the same lines - hence my original query.

I am hoping that the tax return has been submitted and that the final liability is £15616.21. (hence the payments on account fro 2016/17 of £7808.10 each). If the op is required to pay only £6663.17 in July 2016 as a balance I calculate that the first POA in January 2016 was £8952.44. which reduces the second payment. Otherwise, as you say, we have £6663.17 in January 2016, £6663.17 in July 2016 and £2290.06 in January 2017. Total payment in January, with the 2016/17 first POA would be £10098.16.