Page 1 of Self employed filing tax return online - help please

I did my tax return online last year (when PT self employed and PT employed) and it went fine, but come to do it this year and think something is definitely wrong. Filled in all my amounts and the tax is WAY above what I thought it should be.

Firstly are you taxed on your turnover or your turnover minus expenses? What difference do expenses as equipment etc (capital) have against expenses like travel? Does the full amount not get taken off?

For last year minus expenses I was on a similar income to when I was full time employed, yet the tax is over 3 times as much, surely must be wrong! Also what rate is NI class 4 at? I pay class 2 weekly by direct debit and am a sole trader - do I even need to pay them?

Would it just be much easier to get an accountant to do a one-off tax return for me each year, is that possible?

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Dude....get yrself an accountant - seriously.

I havea DD set up to pay mine £55 per month to do all all my tax returns, VAT returns a full set of accounts. Worth their weight in gold i tell ya....

Let a professional concentrate on the numbers so you can concentrate on your business.

I can give you my accountants details if you like as he pretty flexible - drop me a pm if you want.

Just whack all your documents/receipts and stuff in special delivery and i`m sure he`d sort if for you....

Also - isnt it a bit early to be doing your tax return for 07/08? Not due till Jan 09 i thought?

ps, I`m based in Cambridge and he`s in Peterborough so doing stuff by post isnt a problem....

HTH :)

This item was edited on Monday, 11th August 2008, 13:23

Class 4 N.I. is at 8%.

Quote:
I pay class 2 weekly by direct debit and am a sole trader - do I even need to pay them?

If your total self employed income is below around £5000 (I`m sure it`s a few hundred pounds below the personal allowance, but haven`t done one this year) then you may apply exemption from Class 2 N.I.

Quote:
What difference do expenses as equipment etc (capital) have against expenses like travel? Does the full amount not get taken off?

For the year ended 5 April 2008 you would get 50% on the first year and then 25% on any balances brought forward, but from the current year onwards you now get 100% allowances on the first £50,000 capital additions and then 20% on anything brought forward.

If you are claiming pure business travel expenses then I would assume that you have claimed only the allowable amounts.

Without knowing your income it`s hard to give any real advice (plus the above, I`ve tried to make as simple as possible without giving an in depth guide to capital allowances).

Basically you will get the first £5225 at 0%

Then the next £2230 at 10% income tax, plus *% N.I.

Then everything after that up to £39,825 (total income) will be at 22% income tax plus 8% N.I.

Was your tax bill last year under £500?

If so you may have "payments on account" which are due 31 January 2009 and 31 July 2009 which are each half of your total tax bill for the year ended 5 April 2008 and are basically deposits towards your 5 April 2009 tax liability.




www.last.fm/user/1mills

This item was edited on Monday, 11th August 2008, 13:32

Quote:
Also - isnt it a bit early to be doing your tax return for 07/08? Not due till Jan 09 i thought?

The deadline has been brought forward for paper returns to 31 October 2008. Online returns may be submitted after that date and if an online return fails you may not get a penalty, but it`s a grey area and basically you will get a penalty and then have to go through the hassle of appealing is our current understanding.

Basically the Revenue are saying it will be fine, but I forsee a load of paperwork in appealing against penalties from current correspondence with the Revenue. There are still major flaws in their software and their compatibility with third party software.

We`ve told all our clients that the deadline was last month for their books, as the deadline is 31 October 2008 as we will be unable to guarantee no penalties after that point if the Revenue reject an online return. We`d assume most if not all will be fine eventually, but basically we covering our backs.

In JonnyTV`s case, I`m sure he wants to know how much tax to pay so he can budget for it, rather than be hit with a massive bill.




www.last.fm/user/1mills

This item was edited on Monday, 11th August 2008, 13:29

as you guys are in the know, I started my own company in april, When will I have to pay

TAX, NI etc. I have an accountant but havn`t set up a meeting to have a detailed discussion.

Just wanted to know as I need to start putting more money aside for the bill !

Thanks both. 1mills it`s the NI that`s bothering me. So NI class 4 comes at 8% on my total income, plus 10% on earnings up to £2300 and 22% after that, basically makes it that I have to pay 30% of my income on tax and ni (on top of weekly ni class 2) is that right?

That`s what my calculations are coming out as. Just wondering how that can be right when I was paying about 13% altogether per year.

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Quote:
as you guys are in the know, I started my own company in april, When will I have to pay

I take it there`s a slight mis-use of terms there? A company will only usually refer to a limited company that will have been registered with companies house?

I`m guessing your actually self employed?

You should have notified the Revenue of starting self employment by filling in form CWF1 within 3months of the start of trade and should now be paying Class 2 N.I. which is £2.30 per week (I think at the moment).

Usually your accounts would be prepared to 31 March 2009 or 5 April 2009 and then your tax will be payable by 31 January 2010, but as mentioned above there payments on account will be due of 50% of the tax liability for 31 March 2009 on 31 January 2010 and 31 July 2010, unless your tax liability is under £1000 then no payments on account will be due (this is only from the 08/09 tax year onwards).





www.last.fm/user/1mills

Quote:
Thanks both. 1mills it`s the NI that`s bothering me. So NI class 4 comes at 8% on my total income, plus 10% on earnings up to £2300 and 22% after that, basically makes it that I have to pay 30% of my income on tax and ni (on top of weekly ni class 2) is that right?

Yeah that`s right unfortunately.

Quote:
That`s what my calculations are coming out as. Just wondering how that can be right when I was paying about 13% altogether per year.

I don`t undetstand what you mean by you was paying 13% per year in employment?

If you were employed you would have paid income tax at the same rates mentioned above but N.I. would have been 11% instead.

Unless your 13% is the average on your total income, which if you take your self employed tax bill and average it out may come in at less?




www.last.fm/user/1mills

Get an accountant - Mine does everything for me, PAYE, NI, VAT etc etc.

All I have to do is send records of income & expenses then I get told who to pay & when.




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