Please help clear something up for an idiot.

Markus247

During the first lockdown i started a second self employed job. It turned out to be quite profitable which was good as I was saving for a house. I did not bank any money from this period and I spent it all on deposit on my first home. The earnings started around January 2020. I filed my tax return with an accountant April 2021 and he has given me a tax return of £11,000 due 31 January 2022 plus and additional £4,000 due 31 July.

I have now saved up the £11,000 in preperation for January.

The problem is that since April 2021 my earnings have increased more, I have earned around £40,000 since then.

So would I be in correct in saying:

1) The £11,000 that I am paying in January is money that I should of saved instead of putting it into a house deposit.

2) This payment of £4,000 due on 31 July will change when I file my taxes this year and they find out that I earned more than predicted?

3) Tax is payable every six months? (I thought it was once a year in January, so I wasn't too worried before)

4) The payment due in July will be for the tax on the £40,000?

5) How screwed am I out of 10?

Thanks, I'm really stupid and I was just foccused on saving as much money for my first home. My accountant doesn't explain it in a way that I can understand, so please go easy on me.

sheramber

if you are due to  pay £4000 in July then you will also have a payment on account due in January 22 of £4000. You always have two the same.

SO, balancing payment for 20/21 to be paid on January 22 is £7000

1st payment on account £4000 due January 22

2ND payment on account £4000 due July 22

When you submit your return for 21/22 you will have paid £8000 towards your 21/22 bill . Any extra due will be payable as a balancing  payment in January 23 along with a Payment on account of 1/2 your 21/22 liability  towards your 22/23 bill and a similar payment on account due in July 23.

e'g if you final liability for 22/23  is £20,000 you will have paid £8000  ( January and July) so your balancing payment due January 24 would be  £12000.

Along with your 1 st payment on account of 1/2 of £20,000 = £10,000.

[Deleted User]

To address the cash flow concerns - the payments on January 2022 and July 2022 will not change at all, regardless of what the 2021/22 accounts show. As sheramber states, January 2023 is the ‘settling up’ date for 2021/22 - final liability less the two payments of £4000. 

Markus247

Thank you so much guys I actually get it, wish my accountant had worded it that way.