TaxPersonal TaxSelf-employed warned of difficult year

Self-employed warned of difficult year

While the UK's self-employed taxpayers are finalising their tax returns for the 31 December deadline, they should begin planning for a tough year ahead.

The warning comes from the London Society of Chartered Accountants, which believes changes to national insurance contributions, combined with the system of interim tax payments could lead to some unpleasant surprises.

‘It’s essential for many self-employed people to plan ahead to meet these bills,’ said the LSCA’s Kenneth Crofton Martin.

‘The problem stems from the fact that interim payments are based on the previous year’s tax liabilty. When the final tax liability for 2000/01 is established, not only has the balance of any tax to be paid, but the higher total will set the level of interim payments for the next year,’ he said.

The LSCA has calculated a trader earning £28,000 currently would pay tax and national insurance contributions of about £6,100 for 1999/2000. Most of this will have already been paid in interim payments. Next year the same trader will be asked to find an extra £750 in January 202 and £250 in July 2002.

‘Viewed against existing levels of payment on account in January and July of around £3,000 this is a hefty rise. Some people are going to find 2002 a very difficult year in terms of cash flow and need to tighten their belts now.’

Links

Revenue offices open late for deadline

Revenue admits tax statements errors

Related Articles

Inheritance tax is 'unfit for modern society' and should be abolished, says think tank

Personal Tax Inheritance tax is 'unfit for modern society' and should be abolished, says think tank

3w Alia Shoaib, Reporter
Rent-a-room relief – the survey says…

Personal Tax Rent-a-room relief – the survey says…

2m Helen Thornley, ATT Technical Officer
What should the OTS prioritise in its review of inheritance tax?

Personal Tax What should the OTS prioritise in its review of inheritance tax?

4m Alia Shoaib, Reporter
LITRG urges government to consider tax changes in disability work plan

Administration LITRG urges government to consider tax changes in disability work plan

5m Lucy Skoulding, Reporter
HMRC appeal rejected in Tottenham Hotspur case

Administration HMRC appeal rejected in Tottenham Hotspur case

6m Emma Smith, Managing Editor
HMRC urged to clarify impact of income allowances on Self-Assessments

Personal Tax HMRC urged to clarify impact of income allowances on Self-Assessments

7m Alia Shoaib, Reporter
New trading allowance: simplicity, but not as we know it

Administration New trading allowance: simplicity, but not as we know it

7m Emma Rawson, ATT Technical Officer
Wealthy individuals could circumvent top tax rate rises

Personal Tax Wealthy individuals could circumvent top tax rate rises

9m Alia Shoaib, Reporter