Tax Reserve Account

traxor · Jun 19, 2009

Okay, I'm not entirely sure if I'm going to make it past the tax threshold for the year, I'm only currently at £1000 takings, which would be about £250 tax if it was going to be taxed, should I have a reserve account ready in case I have to pay it at the end of the tax year (April), or just wait. I don't want to get to April next year, and be un-prepared, but then again, if I don't make it past the threshold, I'll have £1500 in the account that I could've used on other things?

What would your advice be?

Luke

elaine@cheapaccounting · Jun 19, 2009

are you a sole trader?

traxor · Jun 19, 2009

Yeah, self-employed. No employees.

elaine@cheapaccounting · Jun 19, 2009

ok you can earn (that is profit) £6475 for 2009 / 2010 before tax - then tax is 20%

But remember Class 4 NI.

8% on profits over £5715 up to £43875 when it reduces to 1%

Work this out and then out it in a reserve account (I suggest an ISA) and don't spent it!

traxor · Jun 19, 2009

Okay, so when should I start paying NI? Shall I just keep a running total of what I'm earning so far, because I think I've barely made £100 to be honest...

elaine@cheapaccounting · Jun 19, 2009

are youn register as self employed and payign class 2 NI? You should be.

Class 4 is paid to the same time scales as your tax

traxor · Jun 19, 2009

elainec100 said:
are youn register as self employed and payign class 2 NI? You should be.

Class 4 is paid to the same time scales as your tax

I'm registered as self employed but I have an exemption certificate for national insurance.

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