[simbo]

same as matt, don't miss it beacause i have to wait for it anyhow. I am still reeling from the 12k turnover. I am paying my first tax bill in jan as i understand 1 year plus 50% don't really know what thats all about but have covered myself anyway
simbo

[Moderator David@stives]

you only pay for what you have earned.

say you submitted your tax return for the year ended April 2003, you have had a years delay from paying your tax that year.

That years accounts need submitting by December 2003 then payment due by January 31st 2004 , basically you have not paid any tax for 21 months.

at that time you will have to pay on account  half of the next tax years account (year end april 2004) so you are paying tax owed upto April 2003 and half the tax for the year ending april 2004 considering it is due in January 2004 and the next payment due in JJuly 2004

[simbo]

cheers dave i was sort of thinking that way am still well coverd anyhow and have started putting away for jan 2008, have had a couple of very good jobs lately
simbo

[Moderator David@stives]

Glad you understood my post , sometimes its hard to type these things

 example, on 31 January 2007 you will have to pay both of the following:

the balance of tax owing for the year 2005-2006
the first 'payment on account' for 2006-2007

[Ian_Giles]

Viewing the results so far I have to say I'm quite surprised by how many of us put money aside every week to cover the tax bill.

In years past I never bothered, to be honest, prior to WFP my income was fairly modest, or when it was a little higher I had things I could offset against tax to reduce my bill.
I'm now at the point where I'm going to have to increase the money I'm putting aside.

For those that think, "Hell, how on earth can I afford to put 30% of my turnover aside to cover my tax bill?"

Well of course you don't have to put anything like that to one side.
You need to put to one side ....er...what is the standard tax rate? Is it 20 or 25%??
Well anyway, you need to put away roughly 20% of your profit, as it is this part of your turnover you will eventually pay tax on.

Don't forget, the first 5k or so is exempt from tax, then you have all your personal exemptions and all of your business costs.

You experienced guys are well aware of all that of course, but some of you newbies may not be.....unless you come from an accounting background of course!

Ian

[Moderator David@stives]

Ian

 with the first £6500 of profit you only pay £150 tax and about £120 NI , also i would say most would have between £5000 and £10000  in running costs if wfp so no tax to pay on that , also if you employ your wife that is about another £5000 tax free.

The way i work it out is approx , First £17500 no tax to pay due to above then 30 % on the rest of turnover until you get to the 40 % bracket

[busydaffodil]

 I put away 20% of my weekly profit.   

This is more than enough to cover my Tax bill but because I pay my bill in December, I use the left over money for Xmas.   This has always been enough saving to cover tax & Xmas comfortably.  I use my Tax bill savings as a sort of yearly saving plan that covers Xmas too.  Works for me.

[Paul Coleman]

When pay up time comes, I right out a credit card cheque and spend the next 6 months repaying it.  Not clever I know ...

Shiner, I reckon you'll be paying more interest on your credit card bill than what the tax man will charge you.

Do as I did; phone the tax man, tell him you're skint and agree on a repayment plan.

With regards to your debt, I used to be a debt councillor in the army (one of my many hats I used to wear) and have also been in debt after a messy marraige break up, where my ex took all the assets and I took all the credit; which soon turned to debt.

If you're struggling with debt, you have many options these days; bancrupcy being one of them (from what I understand, bankcrupcy isn't as bad as it used to be). 

Try searching for some debt forums, there's many about and find out what your options are.

Tosh.
Thanks for the tips.
I have looked and researched the options that are open to me.
Bankruptcy would leave me at risk of losing my home.
IVA would also because a 75% (I think) majority of creditors have to agree to allow it.  This is not guaranteed because the equity in my home is almost as much as the debt so the creditors would probably note this and disallow an IVA.  Apart from that, you can still get stung for the money after an IVA has expired - especially if there is equity still in the home.
The other method of reaching an informal arrangement with creditors still allows them to keep phoning you and that would grate on my nerves.
I could sell my home and use the equity to repay and go and rent somewhere.  This would not be a disaster as I am single.  In fact it could give me some freedom back.

However, the option I have gone for is to remortgage.  Although this isn't ideal, I feel it is the best option open to me.  It will cut my outgoings by about £600 a month at a time when I have escalating income and income potential - mostly thanks to WFP.  Because of WFP I have two weeks spare in my 6 weekly work cycle which can be used to earn a lot more money.
The deal will be done within a week.  The surplus money will be used to repay unsecured debts.  A few clothes and a week in Spain would go down a treat too.
I have fixed the deal until Autumn 2009 and this was achieved before the recent interest rate hikes.
By Autumn 2009 I anticipate my mortgage to be my only debt and a lump sum thrown in to reduce it a bit plus I will be earning far more than I do now.
I just got sick and tired of my head spinning with all these different card bills etc coming through the post.

It's not greed that is motivating me but financial survival.

Of course it may all go wrong if I get unexpectedly ill or something goes pear shaped.  But what's the worst thing anyone can do to me really?
The worst that can happen is to be skint and homeless.  If I had a serious enough health problem the state might step in, they might not.
I've been in worse situations but I was much younger then and bounced more easily  .

I'm looking forward to getting a bit of freedom back once this remortgage goes through.

[WavieDavie]

My Tax bill is in the thousands.  I also dont mess about with the 2 payment system of Jan & July.   I pay it all in December usually...the reason I pay it all in 1 go is because I might forget the July deadline & be fined!  theyre not getting 1p more than necessary.   And yes, I do know theyre earning interest out of my advance payment........and I do know that I could probably get reminders off IR or set my compy to remind me BUT I dont take the risk.  Also, Dec is my BEST month & its when I am the most flushed.    Best get the big bill outta the way before Xmas, paying it off with what I have saved all year, then the rest is left for Xmas shopping, meals out etc

We all probably have our own system.    Mine works for me.    Yours works for you.    Each to their own.

I know you might be set in your ways, but you're giving your money away doing this.

Your tax bill is in the thousands - mine is too and it breaks my heart - but how much interest are you losing by paying early, and in a oner? Enough to buy a few extra Xmas presents, I think. It's not A big bill, it's a bill you're allowed to pay in two instalments, and one of the advantages of being self-employed is to arrange your own finances to suit you, not the taxman.

Trust me, you won't forget to pay the July one when it comes in. You can say to yourself that this is really costing me so much less, because of the extra interest I've earned. WooHoo - Result!!

Think it through - you know it makes sense.


As an aside, visit www.stoozing.com
WARNING - if you're not completely in control of your financial situation, this is NOT for you!

[Helen]

for those of us that have been trading a while, it is quite easy to take the last figure paid to the tax man, work out your estimated % increase in trade for the next period and apply that % to the tax paid figure. Gives you a good idea of what you will have to have and of course regular monitoring of your situation means you can regularly adjust up or down. what you put away each month. We use a savings account as a holding account for staff tax and ni, our own tax, vat payments and  holiday payments. We put away per month a set amount for our own tax. If we have put away that amount early in the month, we then top up with more when we are "flush". It earns interest and give a very good savings plan too!

[AuRavelling79]

The window cleaners on this forum are the cream of the crop! Look at the brilliant advice we've had here for free. £100 an hour from an accountant.

Say thank you.



Thank you (especially Dave St Ives, BusyD, Tosh, Ian, Wavie D ... well everyone actually!)

[Ian Lancaster]

I use an accountant because it gives me a feeling of security when dealing with HM taxman.  (Actually I don't deal with him at all - the accountant does all that!)

Every year I do a "tax projection" so I know where I stand.  It's not difficult, and all the figures are on the Inland Revenue website.  This my forecast for the current year, all worked out

Cheers,

Ian

[Moderator David@stives]

Ian

wasnt i spot on, as you dont employ your wife it works out at 30% above 12.5k

30% of £20k = £6500 approx

[Ian Lancaster]

You're right Dave

I just like to see it all in black and white.  The only thing in this world that can faze me is HM Taxman, so I have a "belt and braces" approach

Cheers,

Ian

[busydaffodil]

My Tax bill is in the thousands.  I also dont mess about with the 2 payment system of Jan & July.   I pay it all in December usually...the reason I pay it all in 1 go is because I might forget the July deadline & be fined!  theyre not getting 1p more than necessary.   And yes, I do know theyre earning interest out of my advance payment........and I do know that I could probably get reminders off IR or set my compy to remind me BUT I dont take the risk.  Also, Dec is my BEST month & its when I am the most flushed.    Best get the big bill outta the way before Xmas, paying it off with what I have saved all year, then the rest is left for Xmas shopping, meals out etc

We all probably have our own system.    Mine works for me.    Yours works for you.    Each to their own.

I know you might be set in your ways, but you're giving your money away doing this.

Your tax bill is in the thousands - mine is too and it breaks my heart - but how much interest are you losing by paying early, and in a oner? Enough to buy a few extra Xmas presents, I think. It's not A big bill, it's a bill you're allowed to pay in two instalments, and one of the advantages of being self-employed is to arrange your own finances to suit you, not the taxman.

Trust me, you won't forget to pay the July one when it comes in. You can say to yourself that this is really costing me so much less, because of the extra interest I've earned. WooHoo - Result!!

Think it through - you know it makes sense.


As an aside, visit www.stoozing.com
WARNING - if you're not completely in control of your financial situation, this is NOT for you!

Thanks for the advice but I have heard it time and time again off my accountant.  Its the way I work with most of my finances to be honest.  I dont do monthly Council Tax payments, I dont do monthly water rates, I pay them off when I have the bill. I dont do monthly gas, electric or phone bills, prefering to pay them in full upon quarterly bill.    My way means I owe everybody nothing.    Having wads in the bank from messing around with my finances would be much more of a headache & worry than paying them off using my present system.   Financial security is my biggest driving force and that doesnt mean having wads in the bank, it means owing nothing & being in control of my finances in a way that suits me.
As for stoozing, well, again I would not mess around like that.    My credit card is used for my shopping and paid off in full every month.  Yes, I know I could probably earn money from changing to a card that pays out a percentage on all payments, but again, its messing around & time consuming.   I prefer to spend my valuable time making sure my business runs correctly & that all IR, EH & H&S systems are up to date.
Once again, thanks for the advice & opinions.   On this occasion I'll not follow them through.  Hope that doesnt offend.
Lizzy

[Londoner]

Paying tax hurts but not paying it hurts a lot more. On Jan 31st my tax bill is £3,800 and this is about typical. It would be SOOO easy to try and fiddle it but the truth is I don't.

The thing is if you earn the money you must ecpect to pay tax. I know someone who for the past three years has had the taxman on his back and he would have been better off if it has been the Mafia. Once they get their hooks in you they never ever let go.

[WavieDavie]

Once again, thanks for the advice & opinions.   On this occasion I'll not follow them through.  Hope that doesnt offend.
Lizzy

Not at all, but can I give you a different example of arranging your finances to suit your circumstances?

I just don't understand why some folk use Xmas Clubs. Instead of giving your money to the club, who gain interest on your money (and apart from the fact they've now got a captive market who're definitely going to have to spend that money with them), what's to stop people putting the money into a high interest bank account? It takes the same discipline to pay in the money, easier if they use internet banking, and now the interest goes to them, so they're gaining twice!

As you say, each to their own. I have customers who pay in advance cos that's the way they feel best with, and I must admit that I don't give them anything off for doing so. (evil laugh)
 
Anyway, that's me off my soapbox now - ta ta

[Ian Lancaster]

Too true, Davie.

I have my business account and a high interest savings account with NatWest.  Every week I make sure I pay in enough to cover all my outgoings into the business account, then every couple of weeks I pick up the phone, any time I like, and transfer my income tax money to the saver account.

When it's time to pay the tax, I pick up the phone again, and the nice man (or lady ) transfers the amount I tell them back to my business account.  I then give them my Inland Revenue reference number, and the correct amount is paid instantaneously to the Revenue.  No cheques, money orders or any hassel, and no delays.  I don't need to wait for confirmation from the taxman that my money's been received, so total peace of mind

Cheers,

Ian

[neil100]

As a rule I save quite a chunk of my money that I earn each week. I have several Bank/Building society accounts, I run one as my busniess account which is a postal account, Thats just to avoid paying the bank for depositing cheques into my account. I get at least 30 cheques every week.

Though I save through the year its not for the Tax man. When it gets to December or June everything I earn for those four months goes to the Tax man.So I start saving in December for Jan 31st payment. As soon as I have the money saved I will pay my Tax bill on line.

I fill out our Tax forms online. The computer works it all out their and then on how much tax I pay.

Nel.