Three line accounts

Brainrugger

Hi everyone and thanks for previous help and advice.
I became bankrupt in May 2018. I am self employed and due to my irregular earnings the OR has requested three line accounts for August,September and October. These are to show:-
1)total month gross earnings
2)total month business expenses-including estimated tax and NI deductions
3)net monthly income-to be classed as my monthly net wages.
I can answer 1) and 3) but with regards to 2) shall I base the estimate on previous tax year and should I set this amount aside or will OR require to hold on to it. Up until now I have put my tax payment on credit cards. What happens if I can’t set anything aside or at least not enough?
Many thanks again for any help

TheGardener

Proper accounts showing the likely tax liability - and a sensible amount set to one side to pay it should be accepted by the OR. Any personal tax currently owed would fall into the BR.

You have no choice but to put aside sufficient to cover your tax liability - if you can't there is a deeper problem with the cashflow/turnover of your business that needs addressing.

Don't forget your pension contribution - upto 6% is reasonable.

enthusiasticsaver

Surely if you know 1 you can work out 2 according to your current tax rate? You cannot put tax on credit cards any more if you are bankrupt so you need to put that aside. Current tax owing from previous years depends on whether included in BR.

TheGardener

Assuming your BR is personal, not business...All personal tax owed up to the date of BR will be included in BR-HMRC will become a creditor same as everyone else and it isn't 'optional' whether you include it in BR or not - it is included.

Your tax liability (if you earn sufficient to be eligible to pay) from the date of BR until the end of the financial year (or until you become employed by another employer - whichever happens first) will be paid to the OR's collection agents under a Nil-Tax code. - I think it is still Clarke Willmott for most folk. This is why its important that you set the money aside.


As enthusiasticsaver says, there will be no credit available to you for the next few years so you need to make sure you make provision for your tax liability from your income.