[The Seven Bays Window Cleaning Company]

Could someone please explain to me why we have to pay part of my income tax into account, and in two payments.

I mean fair enough I pay my tax for the amount earn't for that year, but why should I pay into account for the following year - so I'm paying tax on money I've not yet earnt?

Surely you should only pay tax on the amount you have actually earn t- or maybe that make too much sense

[Niall McAllister]

the taxman doesn't trust you to have it all when it needs paid, so out of kindness
he says
 "split it in two, and don't worry if it's too much, we'll give you back what you're owed, honest"
 

[LWC]

Yep ive just had this shocker, not impressed.

[twt]

If you think carefully about it, when you pay on account every six months you are paying tax on what you have already earned but not declared, where as when you pay just at the end of the year you are paying yours tax in arears.

[Moderator David@stives]

If you think carefully about it, when you pay on account every six months you are paying tax on what you have already earned but not declared, where as when you pay just at the end of the year you are paying yours tax in arears.

Ditto

[The Seven Bays Window Cleaning Company]

Yeh, except I've got my bill for last year which is X amount of pounds for last years takings to be paid by 31st of Jan - fine.

Then I have a X amount of pounds to be paid for monies yet to earnt for the period 2009 - 2010 - the 1st part to be paid by 31st Jan, and then a second amount in July.

So, as I see it there having money as tax, that I have yet to earn - 

I'm not trying to get out of it.  I just don't understand why I have to pay in advance - But then when the govenments concerned I don't suppose I'll ever understand

[dai]

Yeh, except I've got my bill for last year which is X amount of pounds for last years takings to be paid by 31st of Jan - fine.

Then I have a X amount of pounds to be paid for monies yet to earnt for the period 2009 - 2010 - the 1st part to be paid by 31st Jan, and then a second amount in July.

So, as I see it there having money as tax, that I have yet to earn - 

I'm not trying to get out of it.  I just don't understand why I have to pay in advance - But then when the govenments concerned I don't suppose I'll ever understand

Check the dates again, You will probably find that one bill covers you up to April 08 and the other bill will be for a portion of what you have earned since April 08 to date.
If you were in a job paying P.A.Y.E, you would already have paid tax on your earnings from April 08 to date. The tax man doesn't want to wait until January 2010 to get paid for money you have already earned.

[Ian Rochester]

But next year you will only be paying the other half of this years (2009) tax and half of next years (2010), it's only in the first year that you get hit hard.

If I remember rightly you can elect to pay your tax on a monthly direct debit to the taxman if this suits you better

[The Seven Bays Window Cleaning Company]

But next year you will only be paying the other half of this years (2009) tax and half of next years (2010), it's only in the first year that you get hit hard.

If I remember rightly you can elect to pay your tax on a monthly direct debit to the taxman if this suits you better

I suppose this is my first real year - last years bill was part P.A.Y.E. I can see next year will be different - I still allowed to be a bit grumpy about though

[twt]

Yeh, except I've got my bill for last year which is X amount of pounds for last years takings to be paid by 31st of Jan - fine.

Then I have a X amount of pounds to be paid for monies yet to earnt for the period 2009 - 2010 - the 1st part to be paid by 31st Jan, and then a second amount in July.

So, as I see it there having money as tax, that I have yet to earn - 

I'm not trying to get out of it.  I just don't understand why I have to pay in advance - But then when the govenments concerned I don't suppose I'll ever understand

like i said think very carefully and you will see that when you actually pay on account you will have already earned the money you are paying tax for, and that is why usually (if your profit has increased) you will have a balancing payment to pay in jan because you wont have paid enough tax.

trust me it is right because i believed that when i eventually cease trading i would have a nice tax rebate (because i thought i was paying tax on money i hadn't earned yet) until my accountant explained it to me. Its easy to get confused and hard to explain in writing but think about it for a while and it will make sense.

[macmac]

Yeah, + the stealth tax of class 4 NI !

[ftp]

I got caught with the NI bit too. They don't tell you that when you start those lovely cheap NI payments. 
Just have to make sure you put more than you think you'll need to one side.

[twt]

A good way to deal with your tax bill if you are a one man band is to save 30% of your turnover (not profit) that way when you come to paying your tax bill you will have a lump sum left over. I do this and have been able to treat myself with whats been left over.

[paulscotney]

A good way to deal with your tax bill if you are a one man band is to save 30% of your turnover (not profit) that way when you come to paying your tax bill you will have a lump sum left over. I do this and have been able to treat myself with whats been left over.

Good advice

[LWC]

I can see where your coming from though Seven Bays, and i know what your all saying, but it does hit you hard, April 2007 - 2008 was my first proper year with no expense.

Ive been window cleaning for around 4 -5 years, but the first couple of years only part time around another job. The third year i bought all my equipment so didnt have any tax but the 4th year was where i earned and didnt spend.

Got so used to not paying much tax that this hit me hard when the accountant letter came.

Opened it on xmas eve...nice present lol.

Will know for next year, but thing is ive gone and bought all this new equipment so maybe i might be up for a refund  wont hold my breath though.

I think im gonna lease a second vehicle in april to keep my tax down!