[Tosh]

I'm not the best at managing my finances at times and always seem to get caught out by the tax man.

To be honest, it's been a struggle getting enough together to pay my second payment on account for the end of July, but I'm there; just about.

Anyway, to cut a long story short, if you're as rubbish as me, you can pay a monthly amount by standing order (or direct debit), every month, even when the Tax Bloke isn't chasing you; so you're in credit.

You've got to phone this number though (0845 3661204), and let them know your intentions; otherwise they'll post you a cheque for the amount you're in credit for.

The best way would be to save a monthly amount into an ISA and pay the tax man from that ('cos then you'll get interest); but if you're undisciplined like myself, a standing order or DD might be the way ahead.

It's a bit like Pay As You Earn!

[Davew]

I've started a reserve account to run alongside my business account - the plan being that I put twenty two percent of my earnings away every week.

[Tosh]

I've started a reserve account to run alongside my business account - the plan being that I put twenty two percent of my earnings away every week.

If you're as undisciplined as me, this mightn't be the smartest move.  It sounds like you have to calculate 22% of your earnings and physically visit a bank; maybe?

Is there any scope for missing the odd payment, or two, or three (if you're me?)?  Probably.

A local guy to me sounds pretty disciplined; he cleans the windows of a building society and when he goes to collect he pays his estimated monthly sum of tax into an ISA in that establishment.

I personally need something that I can both budget for (ie a regular payment out) and is done without me having to do anything.

I guess this is a 'top tip' for disorganised folk like myself; and I bet I'm not just the only one here.

[matt]

my july "request" arrived today

so thats something to look forward to paying

[Lizzy]

i always forget you guys have to pay in July.  I have my tax bill in December & pay that and the following Julys payment.

As for saving, I put away 25% of my profit every week.  For me it covers my Tax & NI plus is a small savings plan for xmas. It usually has enough after paying out Tax, etc, to cover Xmas pressies & the weeks wage I lose when closed over Xmas.  But then, I have been self employed for the best part of 19 yrs. (Jeez...thats half my life mun)

[Sir Squeaky]

Don't get me started.
The theiving scumbags asked me to pay in July this year too.
In the past I've paid in January and that's been it.

Why I have to pay double this time they can't answer. :

They're getting £150  a month when I remember, but I don't know when it ends, and they've never shown any receipt of payment.

For this reason I'll make them sweat more.

I hate them with a passion, and I hope their cars catch fire and their pets get run over.

[Clear Vision]

Do you guys pay your self a wage every week out of your income?

Drawings to be exact.

[Lizzy]

If your a sole trader, your tax bill is based on the businesses profit, not on what you take as Drawings.  You can list them if you wish but they would really only be for your own records.   
"Drawings" would be more relevant for partnership etc really, though Directors tend to use the "dividends" loophole to extract their money 

[Lizzy]

Don't get me started.
The theiving scumbags asked me to pay in July this year too.
In the past I've paid in January and that's been it.

Why I have to pay double this time they can't answer. :

They're getting £150  a month when I remember, but I don't know when it ends, and they've never shown any receipt of payment.

For this reason I'll make them sweat more.

I hate them with a passion, and I hope their cars catch fire and their pets get run over.

Squeaks...I dont know where to start with this one really.

I'm not absolutely positive about this but vaguely remember questioning my accountant about it.    If your tax bill was under £500, you paid your tax bill once a year and didnt have to pay in advance.  A little bit of your tax bill was a small amount on NI contributions as most of the NI contributions were taken via a seperate bill quarterly.
Until a year or so ago, we (self employed) paid £85.50 National Insurance Contributions every 3 months.   If you noticed, this changed to £26 odd.  Most people thought we were getting NI reduction.  Wrong.
IR now deduct more of our NI in with our Tax.  The effect this had was that many people who were under the £500 limit were now over it & were forced to pay not only that years Tax but half of the projected next years.
Many people struggled financially.
On year 2 of this though, your tax bill will be the remaining 50% and 50% of the next years.....so after the hard first year, you then go back to only paying 1 years tax in theory.
I'm rubbish at explaining things!
Hope that helped

[Sir Squeaky]

Thanks Lizzy, I know what you mean.

It's just impossible at the moment though.

I've got another £150 to pay this week, and I've got enough work to do to pay that and my usual bills...just.(if they all have it done)
So no money for me this week.
I'm working purely to give the whole lot away.
How depressing?

I hope their budgies fly off, and they contract syphillis.

[Clive McDonald]

Drawings are important as part of your recorded cash flow. You are supposed to keep track and have a cash in hand figure every week that is carried over and called rather surprisingly last weeks cash in hand the following week. Never mind, I can see none of you bother.

What I want to know is, how do you schedule your round for a holiday?

The other thing I wanted to say is I though we were all loaded judgeing by Dia's topic. And I was sure I could re-ignite that debate  by bringing Churchill into it.   

[NWH]

Squeaky i don`t think you`ll ever make the taxman sweat mate,that`s there job.Tax returns should come with sweat bands.

[Sir Squeaky]

They're probably all sweaty anyway.

[Tosh]

I'm not absolutely positive about this but vaguely remember questioning my accountant about it.  Etc... 

Isn't it more of a case of paying the current years tax, based on your previous years return?

For example if your tax liability was 2K for example in 05/06, then in 06/07 they'll ask for two payments of 1K, one in January 07 and the other in July 07.

If you're quick at getting your tax return in after your July 07 payment, then they'll either refund you any overpayment or bill you for any extra you owe?

Then the same happens in 07/08.  They'll make you pay two payments, one in Jan and one in Jul based on your 06/07 return?

It's what's happening to me?!

[vwm]

Do you guys pay your self a wage every week out of your income?

Drawings to be exact.

a program like george will give you your income forcast for the year should you complete all the work. i used to take 5% off total due to work not carried out, customers losted ec or row with wife lol but have found iam always reaching them +

use this figure to work out per week. pay your self 60% into your joint account so based on 20k per year of work you would pay yourself £230 every week best way buy standing order .  i find then the other 40% covers all business exthingyes , tax/ni pension fund and some profit. also its nice to have some money outstanding.

this way also means that if you do all the work in the year which again you can keep an eye with george not only have you a regualr wage coming in but when you have a bill come in for the business it only a matter of paying it in full. including your tax ect

another thing get an accountant these poeple are worth their weight in gold mine has alway told me "you do the work and let the business work for you"

iv been surpised on how little i realy earn compared to what the business turns over

[vwm]

I'm not absolutely positive about this but vaguely remember questioning my accountant about it.  Etc... 

Isn't it more of a case of paying the current years tax, based on your previous years return?

For example if your tax liability was 2K for example in 05/06, then in 06/07 they'll ask for two payments of 1K, one in January 07 and the other in July 07.

If you're quick at getting your tax return in after your July 07 payment, then they'll either refund you any overpayment or bill you for any extra you owe?

Then the same happens in 07/08.  They'll make you pay two payments, one in Jan and one in Jul based on your 06/07 return?

It's what's happening to me?!

from what i make out if you are liable for 2k 06-07 then you are to pay 2k plus 50% of the next tax year but allow to to pay in installments one in jan and one in july so jan payment will be £2500 followed by a payment of £500 in july . it means we are always in credit with the tax man for 6mths and then in dept with him for 6mths and this is only for the first year of going over the tax bracket which i belive is £500

[Clive McDonald]

Excellent advice vwm. I liked the surprised bit about how little you earn.

[vwm]

its helped me work and run a stress free business for over 6 years now in this game it is too easy to think great earnt 700 this week 600 week before 000 before that and then 400 add this alltogether and its and it suddenly 1700/4=425 per week not the 700per week.

not going to say the first few years wernt easy there not but now i dont worry about business bills at all even new equipment or van mainaince ect.

an overdraft can be handy but this is only used as an extra cash flow and banks normanly give you your mthy turn over which to be honest is ample, handy when waiting for cheques to clear but still enables you to draw cash or use card for fuel ect. since going on mu own and have no wages to pay i hardly use it now and thinking of removeing it as it does cost to have one( bit of advise on overdrafts only take out what you need as the higher the overdraft the more it costs ie barclay is £999  will cost £50 a year 1499=85 and 2000= about 125 some times we have a to larger o/d and are paying over the odds for one and not using it)

hurts abit come 31 jan when a large amount is payable to gorden brown but at least its over and done with untill the next year

[twt]

NO NO NO tosh don't waste your isa on tax money it doesn't make any sense. Your wasting your allowance you are giving the tax man  tax free interest keep it for your personal savings.