By: coach_mcguirk
Chrismear is absolutely right about the complex system of payment "on account" - i.e. paying a chunk of estimated tax for the subsequent financial year in the current one.
I've recently stopped being self employed, but HMRC still want a not insubstantial amount of money from me on account. Just before the end of the last tax year, I had to hand over £800, despite now being employed full-time and paying tax via PAYE. Ridiculously, about a fortnight after I paid, they sent me a statement saying I'd overpaid by almost the same amount. So I claimed a rebate, and they sent me a cheque. Of course, when the next payment on account period comes round, they'll probably ask me for more again.
It's incredibly frustrating, and it's little wonder that so many small businesses either go belly-up in their first couple of years, or opt to work in the black economy.
I've recently stopped being self employed, but HMRC still want a not insubstantial amount of money from me on account. Just before the end of the last tax year, I had to hand over £800, despite now being employed full-time and paying tax via PAYE. Ridiculously, about a fortnight after I paid, they sent me a statement saying I'd overpaid by almost the same amount. So I claimed a rebate, and they sent me a cheque. Of course, when the next payment on account period comes round, they'll probably ask me for more again.
It's incredibly frustrating, and it's little wonder that so many small businesses either go belly-up in their first couple of years, or opt to work in the black economy.