Payments in Advance - should they be included in current tax year???

[Stapleton83]

Ok, so I know this is a sad tax question but I was wondering whether or not the payments I receive on 1st April that are payment in advance for April services should be included in this tax year.Clearly if I was unable to work then I would need to reimburse the parents. I am sure the answer will be yes,but just want to make doubly sure!

Thanks in advance.

Sam x

[Nicola Carlyle]

Yes they do. If you ask for payment in advance then I'm sure you have to out up to and including the 4/5tg April as that us when the tax year ends and begins. Next year you include payments from 5/6th April 2013 to 4/5th April 2014. Dies that make sense? That's how my accountant likes it to be sent to them.

[christine e]

Think Mr Anchovy is the best one to answer this - will be interested to hear what he says

[Kiddleywinks]

If you follow the financial tax year, any payments received prior to August 5th will be last years accounts even though it's for this months fees.

I ended my year on 31st March, so any funds received after this date will go on this years accounts

[christine e]

If you follow the financial tax year, any payments received prior to August 5th will be last years accounts even though it's for this months fees.

I ended my year on 31st March, so any funds received after this date will go on this years accounts

Do you mean April 5th?

[hectors house]

It makes no difference when the payments are received - what counts is the week or month that was worked - so if you are invoicing at beginning of April for work you will be doing in april then that will be 2013/2014 tax year.

If parents are late paying for worked done in March and they don't pay until April then that goes into 2012/2013 - when payment arrives shouldn't make a difference to your accounts.

I think!

[MiniKins]

Income is taxed when earned, not when paid.

So show the proportion of this advance that falls up to years end in last years return, and the remainder next time.

Also, work you have done but not been paid for would be shown on your accounts as a debtor (and similarly costs that you have incurred but not yet paid as a creditor).

[MrAnchovy]

There are two points here.


As MiniKins says, self employed income is taxed when it is earned not when it is received. So if you receive a payment in 2012/13 that is for work done in 2013/14, you include it in your income in 2013/14.
The tax year normally ends on 5th April (so it runs from 6th April to 5th April NOT 5th April to 4th April), but you can choose to end it on 31 March instead so 1st April 2013 would fall in 2013/14 anyway.

[scottishlass]

There are two points here.


As MiniKins says, self employed income is taxed when it is earned not when it is received. So if you receive a payment in 2012/13 that is for work done in 2013/14, you include it in your income in 2013/14.
The tax year normally ends on 5th April (so it runs from 6th April to 5th April NOT 5th April to 4th April), but you can choose to end it on 31 March instead so 1st April 2013 would fall in 2013/14 anyway.


This is great thanks - had been wondering this myself as am still waiting on a march payment!

[Stapleton83]

Excellent thank you for the advice I can now finalise my figures for my tax return.

Sam x

[Rubybubbles]

If you follow the financial tax year, any payments received prior to August 5th will be last years accounts even though it's for this months fees.

I ended my year on 31st March, so any funds received after this date will go on this years accounts

I do the same, new month new year, on my accounts I write the time 1st april-31st march also x

[christine e]

There are two points here.


As MiniKins says, self employed income is taxed when it is earned not when it is received. So if you receive a payment in 2012/13 that is for work done in 2013/14, you include it in your income in 2013/14.
The tax year normally ends on 5th April (so it runs from 6th April to 5th April NOT 5th April to 4th April), but you can choose to end it on 31 March instead so 1st April 2013 would fall in 2013/14 anyway.


Thanks Mr A. it is how I have been doing it but then this post got me thinking I was doing it wrong:thumbsup: