Self-employed advised to claim to pay less tax
Self-assessment taxpayers who earned less in 2012/13 than the previous year may be able to pay less tax on July 31st, by working out their actual income for that year, accountants say.
According to chartered accountant Kingston Smith, although the deadline is looming for the self-employed due to make their second income tax payment on account at the end of the month, a reduced payment can be made to HM Revenue & Customs.
“Payments on account are calculated based on your tax liability for the previous year (2011-12),” explained the firm’s tax partner Andrew Shaw. “Half is paid on January 31st and the remaining half on July 31st.
“In the current climate, individuals may find that their taxable income has reduced since the previous tax year and if that’s the case, they could really benefit by reducing the amount that is due for payment on July 31st. Taxpayers are advised to make a claim to reduce the payments on account online by July 30th.”
Mr Shaw added that individuals should not be tempted to reduce their payments by any more than is justified, as this will give rise to an interest charge when their final tax bill for 2012/13 is calculated.
Payments on account apply to individuals whose previous year’s tax liabilities were over £500 or if the tax on their non-PAYE earnings was 20% or more than the total tax due for the year.
23rd July 2013