Paying tax.Self employed.

[barb1314]

I am coming to the end of my first year of self employment and have registered to do my return online. I understand that the tax due on this year's earnings is due 31 January 2012 but can I pay it earlier? I've trawled through the HMRC website and can't find an answer. I have the tax saved and would rather pay it than have it hanging over me. Or would I be better to put it in a separate account until January. Is anyone who is self employed able to advise me? Thanks very much if you reply.

[DocHH]

Why pay before you need to? If you know how much you owe, just retain it in your "business account" until you need to pay it. It will become a little more complex once you start paying "on account", but if you keep tabs on how much you think you owe each year and retain that in the account, you should not run into difficulties.

[barb1314]

Hi,that's what I thought. Will put it into a savings account I don't have a business account as such.Thankyou for answering.

[kinell]

first rule of business......especially where tax and ni are involved,

do not pay any earlier than you have to

[Skyline D]

You could pay it earlier in theory but you'd need to have the correct reference numbers to ensure the payment went to the correct account. Since it's your first year you won't have those yet and they won't send a bill out until much nearer the time. You could probably request it if you really wanted. The Revenue would be astonished but they'd most likely manage to provide the info.

[DocHH]

I was advised, when I first went Self-Employed to open a separate account and keep all personal and business finances entirely separate. Far easier to reconcile the business income and expenditure in the event that HMRC decide to do a routine inspection of accounts. Any money you take out as "income" can show in the accounts as "drawings". If you then put approximately a third of drawings each time into a savings account, there will probably be sufficient in there to settle your tax and NIC contributions.

[barb1314]

I have no outgoings as I'm a dog walker! but totally understand where you are coming from. I do have a separate account but I don't consider it a business account if you see what I mean. I do keep it separate from my personal account so I can save tax. My NI goes out direct debit from that account.

[tamborine]

The official end of year is 4th April; how come you've completed? Leave any profit in your bank to collect interest.

[twix123]

The National Insurance contributions you are paying by Direct Debit are your Class 2 contributions, but, depending on your 'profit' you could also be liable to pay Class 4 contributions at 8%.

You'll have to pay your tax due for the 2010/11 tax year by 31st January 2012, together with half of the estimated tax due for 2011/12. The other estimated half will then become payable by 31st July 2012.

[Skyline D]

The tax year is actually April 5th tamborine, not the 4th.

But it isn't compulsory to run your business accounting year to that date. The vast majority of businesses use a different date. Tax is based on the profits of a 12 month period ending during the tax year.

[its_me]

Hello there Barb. Basically yes you can pay it early if you wish to do so, but you need to complete the self assesment online in which then HMRC will send a tax bill to you and it will have a counterfoil on the bottom in which you can take to any bank and pay it (this may incur a fee at some banks). In relation to putting the amount into another account by all means that can be done untill the amount payable is due but this is totally upto yourself.

Kevin

[tamborine]

Once you pay your tax there's little chance of claiming it back should something unforseen crop up. You may have more exes up to 4/5th April, earned interest is worth considering - however small.

[barb1314]

Hi Tamborine,I didn't say I'd completed.I have a rough idea of how much tax I owe and have it saved. My tax year end is 12 April,hence why I'm asking so I know where I'm up to financially.Thank you all so much for all your useful answers.