Tax bill shocker!

[Boris]

I had my tax bill today. I had saved up enough but they want me to pay all of the bill plus half again on account for next year. Is this normal? I had no idea! We're talking a lot of money here and I am panicing a bit about finding it by January.

[jumpinjen]

Wow - I don't know if it's normal - can you call them and say sorry but you haven't got it, that you save up for it every month and can't come up with that kind of money out of nowhere as you are a small business - I think that's a bit cheeky of them really!

Jen x

[cathtee]

Hi, sorry you had such a shock it happened to me a couple of years ago. Yes it is normal, if your tax bill is over a certain amount (around the £1000 mark) you do have to pay the full amount plus the next years in 2 halves then if the next bill is not as high as this years then you get a refund.

[Kiddleywinks]

HMRC have been requesting 50% of the current tax bill in advance for some time now, (at least the last 3 years) so not sure how understanding they'd be, but no harm in asking.
On the plus side, if next years bill is a lot lower, you won't have to find as much as you've already got the 50% 'banked'

[rickysmiths]

You can request to pay it monthly but to be honest you would be better setting aside the money in an account of yours and at least get a bit of interest on it. It is a bit of a shock the first time but after that you get used to it.

[PixiePetal]

I had this for the first time last year - but this year my bill was low. Lower than the amount I had paid in advance so got £200 back :thumbsup:

Next year will be high again if I continue to earn what I am now so will put it into savings in preparation.

It has been like this for quite a while now, I knew about it when friends got caught out.:rolleyes:

[ajc]

I got caught out with this a couple of years ago, the HMRC web doesnt make it clear that if your bill goes over £1000 then you pay in the current year and its a real shocker isnt it. Hope you manage ok.

[mum24]

yes, this happened to me too, but I rang the tax office, explaining that my earnings had gone down as I was not as busy as previously. They estimate the bill on last earnings. They were very helpful and after asking me for how much i expected to be in profit, they then helped me calculate how much tax I would pay, which was less than the original bill.
They would not be impressed though, if then the profit was a great deal more than estimated, I was warned that I could face a penalty charge.
But they were helpful and clear, and I would say just talk to them and ask their advice.

[Monkey26]

Yes I too got caught out by this a few years ago! On the plus side you could end up paying more than you need in future years and be like me... i got, not one but, two rebates beginning of the year as I had overpaid for two years on the trot :D xx

[zippy]

I knew about this but totally forgot, glad this thread has come up now, I can prepare for next January, haven't had to pay hardly any tax before but am full
lately. Been thinking about putting a weekly amount away a pertentage of income, can I ask what other people put away or percentages people would recommend please.

[madmamma]

I put about 30% of my income in a savings account, touch wood, it's always been more than I needed to, I think because I don't deduct the tax allowance from the income.
Anything left over after paying the bill is mine to spend on treats - I work hard, I deserve it :laughing:

[jadavi]

I left an office job in July last year and started minding in sept. I have to fill out a tax declaration before oct for sept to April.12. I got a tax return on my office job not long ago. When I fill out my new one will they ask for half next year based on my total earnings for that year which won't be correct? Or half office job and half minding... Or will someone realise ice changed jobs and incomes?

[nikki thomson]

That's one thing I don't have to worry about, I never earn enough to pay tax. X

[The Juggler]

its a tough one isn't it. Especially when you have to pay in January. On the plus side the July bill is not so bad and as evveryone says you might get some money back (or deducted from your next bill).

I put away £200 month to cover tax. Sometimes I need to "borrow" it back but most of it stays there so it's not too painful when the bill comes in.

[Boris]

Thanks guys! Guess you live and learn! Let's hope next year is not as bad x

[Chatterbox Childcare]

The worst one is the first one. As others have explained your pay your tax in January 2013 for 11/12 and then half the amount again for 12/13 and the 2nd half in July 2013.

If you complete your tax return quickly and the amount of tax due goes down the HMRC with adjust your July payment, taking into account the higher amount paid in January too.

The reason for their system is simple and I think makes sense. If you didn't pay upfront and stopped work at the end of March 2014 how would you be able to afford the tax for 2013/2014 in 2015 if you are not working?

[jadavi]

How quickly do we need to pay this tax bill once we get it and can we pay installments? X

[v 1461]

hello,
same with me. I always have to pay half of next year. not nice..

[margimum]

really Boris? I would think you'd be pleased to pay more tax as it means you will have earned plenty! lol:)

[Chatterbox Childcare]

:laughing::laughing::laughing::laughing::laughing: :

really Boris? I would think you'd be pleased to pay more tax as it means you will have earned plenty! lol:)

Totally agree - it does sound good if you look at it this way

[MrAnchovy]

I left an office job in July last year and started minding in sept. I have to fill out a tax declaration before oct for sept to April.12. I got a tax return on my office job not long ago. When I fill out my new one will they ask for half next year based on my total earnings for that year which won't be correct? Or half office job and half minding... Or will someone realise ice changed jobs and incomes?

Your PAYE earnings shouldn't make any difference; if the amount you have to pay for 2011/12 is more than 1000 you will have to pay on account, otherwise you will only have to pay what is due for 2011/12. You have until 31 January 2013 to file a return online and to make the payment for 2011/12 and the first 50% on account for 2012/13 with the second 50% due by 31 July 2013.

[stardust]

How much do you have to earn to pay £1000 in tax?

[Footprints]

My husband does his tax like that I don't believe you have to do it like that though just call them.

[Boris]

My husband does his tax like that I don't believe you have to do it like that though just call them.

Thanks Footprints, I'll give them a call.

There is also over £700 for NI contributions but I pay that by DD every month so I am confused about that bit too.

[MrAnchovy]

How much do you have to earn to pay £1000 in tax?

Assuming you earned more than £7,500 in employment in 2011/12: £5,000.

[MrAnchovy]

There is also over £700 for NI contributions but I pay that by DD every month so I am confused about that bit too.

The amount you pay by DD is Class 2 National Insurance, currently £2.65 a week.

The £700 is Class 4 NI which is calculated at 9% on profits over £7,225 in 2011/12.