JustLetOneOff wrote:Am I right in thinking that self employed people pay tax at the end of January and the end of July?
When they pay tax at the end of these two months for what period are they paying their tax?
I don't understand how these months fit in with the tax year that runs from April.
Can anyone clarify the situation for me please?
They are paying the tax from their accounting year which, under present rules, does not need to be the tax year.
Personal payments for such as pensions, dividends and interest also have to be taken into account but these run in the tax year of receipt.
These are the components:-
A balancing payment if your taxable amount exceeds the January and July payments.
The January and July payments are
in advance for the following tax year.
In the event of reduced profits, you have the option to reduce the payments on account, though if you get it wrong and profits increase, you get charged interest on the difference.
Many self-employed have accounts running from 1 May to 30 April and that gives you a year to get accurate figures for your tax.