Should I have been paying tax? 12pay thinks so..

[Ostrich]

In April last year I started a limited company. I was employed elsewhere at the time as a lorry driver and paying tax on those earnings. The company didn't become active until I quit my job in June, by which time I had already earned well over the threshold. Since then I have not been paying myself a wage as such, just expenses (i.e. 41p/mile travelling to and from various places of work, a small allowance for using part of the house as an office etc etc.) My wife is also a director of the company and I have been paying her a wage just below the threshold (about £104/week) plus the odd non-taxable expenses. My problem is that I decided to have a go with 12pay free payroll software to sort out some payslips, and when I went back to week 11 and input my details and the expenses I had paid myself, it said I should have paid about £20 in tax for that week alone. Now, I'll admit that I really don't have a clue about all this and I've left it all to the last minute, but what happens if I should have been paying tax every week for the past 40 weeks when I actually haven't paid a penny? I'm slightly worried now as the annual return is due in today! Any advice would be much appreciated. I will learn one day not to bury my head in the sand..

[Davem1234]

If I were you I would just use your payroll package to calculate your tax for each week up to 5 April and do the end of year return.

Once you know the tax due you should pay it over as soon as possible as interest would have been running from 19 April.

By the way you paid yourself 41p per mile for business journeys which unfortunately is 1p over the tax free threshold and therefore tax is due on that amount per business mile.

Also just make sure that the amounts you are putting into the payroll package are actually taxable or you'll be paying to much tax.

If you file the return online you will get a £75 reduction against any tax or national insurance due in the next tax year but I'm not sure if you get it if the return is late.

Dave