Small sole trader - Advanced tax for this year?????

Mary_Hartnell

Theoretically I am retired but continue to work on a self employed basis.
My self employed net income can vary considerably but is less than 10K.
Last year 06/07 was a quiet year and when HMR&C calculated my tax, I had overpaid by about 700GBP.
This year 07/08 looks like being a busier year than last year.

I have not had a demand to top up the 700 currently showing as overpaid.

If, when the calculations are done it turns out that I should have had (say) 1000 on my account on 1st February 2008, rather than the 700, will HMR&C try and get funny and fine me for underpayment?

Mikeyorks

A) If the tax due for the previous year was less than £500 then you didn't need to make payments on account (POA) for this year (last Jan / July).

If (not quite sure I've picked that correctly?) you've let the £700 lie on your record in lieu of the payments on account? Then you're still OK provided the tax due for the previous year was £700 or less.

But the override should be that as :-

HMR&C calculated my tax

....then HMRC advise the POAs ..... If they didn't do so, then there should be none due.

In the event you had self-calculated and got the POAs less than they should be .... there is no fine. 'Just' an interest charge levied on the shortfall.

http://www.hmrc.gov.uk/sa/selfemp.htm#4

Murdina

You also do not have to make payments on account if more than 80 per cent of your income tax for the previous year was paid by deduction at source, eg under PAYE - this may have applied to you if you have pensions, bank interest etc. for that year.

Mary_Hartnell

Looks like I'm OK.
(I always tick the box saying DON'T put it on my PAYE code, so I can keep clear in my own mind exactly where I stand).