[P @ F]

Been bad and not put back enough for taxman , any help is great .

Take for year..............£24,100
Expenses...................£  3,800

New van .........£5,875 all in , 40% to claim
System ...........£1,200 all in , 40% to claim

Not sure what the ammount of earnings is , before you have to pay tax ?

Using these ammounts as guide , can any body estimate my tax bill ?

Rich P @ F

[crystal.clear]

around £3100

[P @ F]

   OH DEAR !

Can anybody else get it lower ?

I thought it was gonna be more like £2400

How did you work it out Crystal ?

P @ F

[Alex Gardiner]

I make it £3268.50.  Here's how:

Income £24100
Allowable expenses £6950
Total Income £17150

Personal allowance = about £4900
Total taxable amount = £12250

First £2000 at 10% = £200
Next £10050 at 22% = £2211
National Insurance at 7% = £857.50
Total tax payable = £3268.50

First payment on account due January 31st 2008 = £1634.25 + any tax owed due to earning more this tax year than last tax year,

ie, if you had a total taxable amount of just £10,000 last year you would need to pay the tax owed on £2250 (difference between this year's total taxable amount and last years) which would be £652.50 and your first payment on account would be £2286.75 with a second payment of £1634.25 on July 31st 2008.

The only way of reducing this amount honestly is to examine your allowable expenses and find ways of claiming more, such as so much per week for use of home office, stationary, washing machine, power, storage, telephone use, water rates, uniform, computer, etc. Check with an accountant or even better book an appointment with your local tax office and ask them what you can claim that you are not already claiming, they are duty bound to help you.

The other point to bear in mind is that your £1200 for your system will include some consumable expenses that can be claimed as 100% deductible. Items such as Poles (often last less than a year), hoses, filters, resin beads, connectors (most need replacing every 6 months), brushes.

[Roy Harding]

Just a question ?

Does not the 40% new van allowance apply to a brand new van? and not just new to you ?

Roy

[crystal.clear]

what i dont understand is i earnt such and such money last year and paid half again for next year. does this come off this years tax or what

[Helen]

You can get caught with this in your first year trading. Everyone goes on about how you pay no tax in the first year. But we all should know that you have to pay tax at some point!Theoretically for 11 months first trading you don't. But then in the twelvth you have to pay for the previous year and then half up front for the next year, and then again half again in 6 months time. Your 6 months up front is calculated against your previous years bill so remember if your increase your turnover you will have to pay more! Put money away every month/week/day whatever and you won't get caught out! When and if you were employed before just think how you paid tax then, every time you were paid, so it does make sense to follow that ruling when you are self employed.
Year 1 get tax bill at end of trading year
Year 1 pay up front (x 2 times) for year 2
Year 2 get tax bill at end of trading year, they take you up front payments into consideration, either get rebate or you pay more.
Year 2 pay up front (x 2 times) for year 3.
Hope that helps

[Count Phil]

40% of van to claim as tax deductable is in first year of trading only. Nothing to do with it being brand new. In second year of trading and thereafter a new van is 25% deductable. Or so I believe.

[Russell Macdonald]

Tax office gave me 40% on my van last year & i've been trading over 20 years but only 25% of balance per year after.

I reckon your tax bill is about £3500.

Macc

[NWH]

Whatever it is it`s daylight robbery.

[P @ F]

Hi guys , thanks for all replies , i do have a Q though , the N.I. costs in Alexs post ?  call me green , but why do i also pay £8.80 per month by D.D from my bank?

 Rich P @ F

By the way , im well under target to pay the tax bill , is there any sites that tell me the ins and outs of tax costs , it would appear that my tax office told me the wrong percentage to put away each week , and i reckon my accountant is a bit of a tool also !

   

[DASERVICES]

Rich,

Looking at your expenses which I presume include petrol, van ins etc.. have you also looked at the 40p per mile route. What you need to do is add up all your van expenses including depreciation etc.. and then times your first 10k miles by 40p per mile and the balance by 25p per mile.

This way you can find out which is the best calculation to net off your tax bill. The 40p per mile works best for me as I do around 14k miles per year so get £5k back from the tax man compared to the other route where I would get around £2.5k.

Doug

[JohnL]

P&F  -  the self employed have to pay extra Nat Ins 

[Paul Coleman]

Hi guys , thanks for all replies , i do have a Q though , the N.I. costs in Alexs post ?  call me green , but why do i also pay £8.80 per month by D.D from my bank?

 Rich P @ F

By the way , im well under target to pay the tax bill , is there any sites that tell me the ins and outs of tax costs , it would appear that my tax office told me the wrong percentage to put away each week , and i reckon my accountant is a bit of a tool also !

   

Go to:

http://www.hmrc.gov.uk/rates/nic.htm

and then scroll down to the bit where it says:-  "Class 4 rate between lower profits limit and upper profits limit".  Basically, that bit means that every bit of taxable income from your window cleaning between £5,035 p.a. and £33,540 p.a. is subject to 8% National Insurance - over and above the £2+ per week you already pay.  That's the 2006-2007 rate.  The upper and lower limits are probably slightly lower for 2005-2006 but I think they are still at 8%.  I believe that the above numbes refer to taxable income so you would need to factor in your personal allowance too (I think!!)