Basic self employed tax return questions
Discussion
Some basic self employment questions here regards my wife’s business.
She is self employed works from home.
She has never previously earnt over the personal allowance amount, due to basically working part time due having and looking after the kids.
Due to submit her tax return today, but her turnover this year has much improved and is approx 18k, with total expenses running about 2k.
How much tax will she be paying on this return? Is it 20% on any profit over the personal allowance threshold?
So 18k turnover less 2k expenses = 16k profit
16k less 12.5k personal allowance = 3.5K, so she pays 20% of 3.5k = £700 tax bill?
Sorry for the amateur questions, your expertise much appreciated.
She is self employed works from home.
She has never previously earnt over the personal allowance amount, due to basically working part time due having and looking after the kids.
Due to submit her tax return today, but her turnover this year has much improved and is approx 18k, with total expenses running about 2k.
How much tax will she be paying on this return? Is it 20% on any profit over the personal allowance threshold?
So 18k turnover less 2k expenses = 16k profit
16k less 12.5k personal allowance = 3.5K, so she pays 20% of 3.5k = £700 tax bill?
Sorry for the amateur questions, your expertise much appreciated.
Just over £2K with payments on account I'm afraid:
https://www.employedandselfemployed.co.uk/self-emp...
Make sure she's claiming all she can- use of home as office, proportion of various costs if applicable. Setup costs if first year etc.
https://www.employedandselfemployed.co.uk/self-emp...
Make sure she's claiming all she can- use of home as office, proportion of various costs if applicable. Setup costs if first year etc.
Countdown said:
She'll also have Class 2 and Class 4 NIC to pay.
Re: payments on account I stand to be corrected but I think she will be able to opt out of that if next year's profits are likely to be lower.
Correct. There's a box to tock if you want to opt out of payments on account, which I ticked, and it zeroed the amount.Re: payments on account I stand to be corrected but I think she will be able to opt out of that if next year's profits are likely to be lower.
I only did mine 2 days ago and, as lonng as you have your income and expenses figures it works the rest out. Took about half an hour to do.
QJumper said:
Fusss said:
Countdown said:
Not NI - the "payment on account" bit.
What are you opting out of paying? As long as you are certain that this year's (2022/23) turnover is down on 2021/22's. HMRC take a dim view if you reduce the payments on account because you just don't fancy paying next year's tax bill in advance, and can sometimes impose interest charges if turnover ends up being similar after you've reduced payments on account.
You have 9 months to complete the return btw, it doesn't have to be filed on 31 January.
Koyaanisqatsi said:
HMRC take a dim view if you reduce the payments on account because you just don't fancy paying next year's tax bill in advance, and can sometimes impose interest charges if turnover ends up being similar after you've reduced payments on account.
Yes, I had that. Fusss said:
Jeez guys, were not filing the accounts for Chelsea Football Club here....
I was thinking more of the reliability of the various systems involved. I went in to the SA site last week when I wanted to check exactly how much they wanted, and got a "something went wrong - try again later" message when I tried to login. That would cause some trouble if it happened today, and being the last day it might well be busier today. Sometimes the bank that I send the payment from decides it will take overnight (or I forget that I pay it from a bank that doesn't do faster payments, more likely) and that's an issue right at the end.Presumably it all went OK for you.
Koyaanisqatsi said:
As long as you are certain that this year's (2022/23) turnover is down on 2021/22's. HMRC take a dim view if you reduce the payments on account because you just don't fancy paying next year's tax bill in advance, and can sometimes impose interest charges if turnover ends up being similar after you've reduced payments on account.
Interest is always charged if the tax turns out to be more than the reduced (or non-existent) payments on account.Edited by MaxFromage on Tuesday 31st January 18:48
MaxFromage said:
Koyaanisqatsi said:
As long as you are certain that this year's (2022/23) turnover is down on 2021/22's. HMRC take a dim view if you reduce the payments on account because you just don't fancy paying next year's tax bill in advance, and can sometimes impose interest charges if turnover ends up being similar after you've reduced payments on account.
Interest is always charged if the tax turns out to be more than the reduced (or non-existent) payments on account.Edited by MaxFromage on Tuesday 31st January 18:48
That's true, but lots of people don't pay the payments on account because they can't afford to... The usual financial planning. A cheap loan from GOV.UK saves them.
I have a client who is remortgaging their property for another £70K because they can't afford the tax or the payments on account. Why I hear you ask? Downturn in business? Illness? No, they bought a Porsche.
I have a client who is remortgaging their property for another £70K because they can't afford the tax or the payments on account. Why I hear you ask? Downturn in business? Illness? No, they bought a Porsche.
MaxFromage said:
That's true, but lots of people don't pay the payments on account because they can't afford to... The usual financial planning. A cheap loan from GOV.UK saves them.
I have a client who is remortgaging their property for another £70K because they can't afford the tax or the payments on account. Why I hear you ask? Downturn in business? Illness? No, they bought a Porsche.
I have a client who is remortgaging their property for another £70K because they can't afford the tax or the payments on account. Why I hear you ask? Downturn in business? Illness? No, they bought a Porsche.
MaxFromage said:
That's true, but lots of people don't pay the payments on account because they can't afford to... The usual financial planning. A cheap loan from GOV.UK saves them.
I have a client who is remortgaging their property for another £70K because they can't afford the tax or the payments on account. Why I hear you ask? Downturn in business? Illness? No, they bought a Porsche.
Not "paying in advance" isn't a loan from the UK Govt. if anything "paying in advance" is giving THEM a loan.I have a client who is remortgaging their property for another £70K because they can't afford the tax or the payments on account. Why I hear you ask? Downturn in business? Illness? No, they bought a Porsche.
QJumper said:
MaxFromage said:
That's true, but lots of people don't pay the payments on account because they can't afford to... The usual financial planning. A cheap loan from GOV.UK saves them.
I have a client who is remortgaging their property for another £70K because they can't afford the tax or the payments on account. Why I hear you ask? Downturn in business? Illness? No, they bought a Porsche.
I have a client who is remortgaging their property for another £70K because they can't afford the tax or the payments on account. Why I hear you ask? Downturn in business? Illness? No, they bought a Porsche.
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