Self Assessment - Payments on account!

reedi

Hi all,

Ive been a freelance designer now for over 4 years now and so far all is well on the self employment front. My only one main area of hassle and worry is all this "payment on account" for a year in advance of tax when it comes the time to pay my dues in April and July.

Krisp_3

What are you worried about, specifically? The fact that you will be paying on account based on last year's income and you may not earn the same amount in the coming year?

Why don't you set aside an amount each month (or something similar) to pay towards the on account bill?

Oh, something I heard from a s/e contact was that their accountant made a real !!!!-up and told them to just set aside £X amount for the next year's tax bill, forgetting that as he had earned significantly more in the year under review than the year before, he would be hit with a higher tax bill accordingly.

Easy for us mere mortals to forget, a bit more significant if you're an accountant!

Good luck with your work!

ohbrightone

You need to make payments on account but these are based on your PRIOR tax year balancing payments (comprising of Class 4 NIC and income tax). Therefore

1. the accountant didn't mess up- the s/e individual misunderstood
2. accountants don't usually take exams in personal income tax- they tend to be more focussed on corporation tax in real life and in all their exams (speak to a CTA for proper tax advice)
3. payments on account are made 31 jan and 31 july every year.