Tax bill. Self employed

Discussion in 'Just Talk' started by Wayners, Jan 18, 2020.

  1. Wayners

    Wayners Screwfix Select

    That time of year when we have to pay tax bill. Oh gee!.
    I urge all self employed people to pay monthly. Just setup a monthly payment to cover or part cover your next bill on your government tax website. I've done this for years. I'm actually in credit a bit. I don't do anything to pay or even bother looking at my tax bill. When my books are done in September I login tax site and adjust payment to cover next two bills and let it ride. Just comes out my bank every month. I started with £100 to see how it worked out.

    I think this is it? Not sure. Setup years ago but this looks like it.

    Simple. No stress. Just another payment out my account every month.
    Start with smaller amount if you can't cover the total bill in July as that's what I did first. I now cover more than I owe just incase I fall Ill or work dries up.

    Is this correct section for post. Can't see a business section here.
    Last edited: Jan 18, 2020
  2. Joe the Plumber

    Joe the Plumber Screwfix Select

    Become a limited company and pay it in arrears instead. And nothing on account.
  3. Wayners

    Wayners Screwfix Select

    Pros and cons for limited company. Seems many are giving up on their limited status after some changes came in. I don't understand it but I have asked my accountant and he said no.. avoid. I can't say why and my interest disappeared
  4. kitfit1

    kitfit1 Screwfix Select

    The biggest downside to being a Limited company when you are a mainly just charging for your labour is VAT. All the tax advantages like, van, diesel, tools, insurance and so on, still apply if you are Limited or a sole trader. As a sole trader though, as long as you are below the VAT threshhold, you don't need to be registered.
    As a Limited company though, you do have to be registered. This put's your cost to a customer 20% above other (in my case) kitchen fitters, which means most customers would go somewhere else and i would end up with no work.
    BikerChris and WillyEckerslike like this.
  5. jimoz

    jimoz Active Member

    Still have the personal tax bill if LTD - have to pay dividends tax for last years divi
  6. Wayners

    Wayners Screwfix Select

    I heard talk this week about what would happen if everyone was vat registered. Be an interesting move but would level the field. Something is going to give as we are getting away with it vs other countries. Best we keep quite and pay are taxes.
    Paul12345 likes this.
  7. Joe the Plumber

    Joe the Plumber Screwfix Select

    My turnover is well below the VAT threshold and there's no requirement to be registered, limited or not, if so, so I don't have to consider that. But I'm lucky and don't need to earn very much. It would certainly be a consideration for someone with large monthly bills to pay.
  8. Bogle Crag

    Bogle Crag Active Member

    Have things changed, when I was limited there was no compulsory VAT registration
  9. Bogle Crag

    Bogle Crag Active Member

    I pay into a savings account for my tax, gets few quid interest
  10. jackelliott07

    jackelliott07 Active Member

    no requirement to be VAT registered even as a limited company, as long as you're below the VAT threshold, which is currently 85k.

    I think we discussed this briefly in another thread, but i think it would be extremely rare that its beneficial to be VAT registered.
  11. BikerChris

    BikerChris Active Member

    Going back to @Wayners , I have thought about paying monthly, but my income goes up like a ****** drawers every month, so I put 50-100 (depends what bookkeeper says) in a saving account and wait til the end of the year.

    I wondered about going ltd, but i heard it costs £1000 a year'ish to have someone to do tax'es, also they have to be well qualified which accounts for the price. I pay £180 a year to a book keeper and its done. Keep good record of my costs, expenses etc. For me I'm not sure if I make it enough to make it worth it. Would not be a need for VAT registered which helps.

    A friend who is ltd did say one bonus is if you get sued or something, the 'company' would get it and not the individual. Mind you, insurance covers things like that.
  12. Wayners

    Wayners Screwfix Select

    @BikerChris Set up monthly payment of £50 to start with. Take the edge off bill. Or login your bank and pay chunk when you are flushed, but who will remember to do that. Savings account ain't worth the hassle. Any driving involved or recording interest on accounts dose my nut. Be so much easier if there was no interest on savings as get that figure wrong it can trigger an investigation. It's why I don't stick money in savings accounts. Also you need enough to pay tax if you can't work. Most people are over a year behind so what will they do when they stop work? It's why I'm slowly getting ahead with credit. Always got next payment covered which gives me 6 months grace
    Last edited: Feb 14, 2020
    BikerChris likes this.
  13. jonathanc

    jonathanc Screwfix Select

    there is no requirement for audited accounts for small business, so you can do all the accounts, tax returns and vat returns yourself if you want. So very little overhead. Also on the flat rate vat scheme you charge 20% but pay something like 14% to Vat man. So if you are largely selling on your labour there is a slight gain. If you sell on lots of products ( where you pay 20%). It’s not so good.
    BikerChris likes this.
  14. dubsie

    dubsie Active Member

    That would scare me, I hate owing money in particular the tax man. I prefer to pay in installments and if my accountant thinks I'm going over the threshold I simply take a long holiday.

    I don't mind paying tax and never have and I'm a great believer in you get what you pay for. Don't moan about the NHS if all you do is avoid tax but what I don't want is an unexpected bill or the work of being VAT registered. Just want to earn enough to live and pay my way.

    I know all too many tradesmen who go about life using stupid scams to avoid paying and in the end they get caught out. They end up paying double back and then blame the system. I know of so many that have been caught out with capital gains tax when selling their house because they have been claiming a rebate on their ends up costing nearly 40% and a property that's inflated by 500%.....they probably shaved a few grand of income tax but got nailed for 250,000 in capital gains
    Last edited: Feb 14, 2020
  15. Joe the Plumber

    Joe the Plumber Screwfix Select

    I just keep the tax money saved in the bank as I earn it and it's there ready when I'm asked to pay it. No fiddles, it's simple.
  16. dubsie

    dubsie Active Member

    That's the best way to do it, I've scaled my work right back so I'm expecting a rebate this year. Probably only working 6 days a month I really can't get motivated at the moment, retirement beckons unfortunately.
    Joe the Plumber likes this.
  17. BikerChris

    BikerChris Active Member

    That is a very good thought about interest, can be a niggly question especially over only a few quid. I'm going to speak to book keeper and like you did, just make a small payment to begin with.

    I'm in my overdraft after a quiet few months, so sadly had to take my 'savings account tax bill' out, just to knock off the edge of my over draft :(

    Cheers though, I am going to look into it!

    EDIT: I don't earn anywhere near to worry about VAT regisrtation, but like you, totally agree tax needs to be paid, can't complain otherwise. Also I used NHS a lot lately, more than happy to pay them back for air ambulance, multiple surgeries and all that.
    Wayners likes this.
  18. Joe the Plumber

    Joe the Plumber Screwfix Select

    Snap (almost). I probably do a few more days a month, but before Christmas I was horrified when comrade Corbyn was talking about a 'four day week'. No way was I going to do that many days!
    masterdiy likes this.
  19. Tony Goddard

    Tony Goddard Screwfix Select

    Here here to saving it, the way I look at it the 20% is not mine, it's a tax I collect for HMRS from my customers, I pop 20% of all income away in a separate account, then there is plenty to pay HMRC and some left for me come janurary.

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