Tax Help

[business newby]

Hi, i've just setup as a soletrader and i've been told to put away 25% of every payment i recieve for the taxman at the end of the year, does this sound right as it seems alot to me? around 25% of payments received will be spent on materials and i'm hoping to pay myself a regular weekly wage out of whats left.
Any advice appeciated.

 

[TaxesClear Ltd]

25 % recommendation is based on your income less your expenses.
Have you registered with the Taxman yet?
if not- you should do so within 3 months to avoid 100 pounds penalty.
Look at our site if you want free initial chat/ advice. (taxesclear.co.uk)
Good luck!

 

[Joyous]

Hi, i've just setup as a soletrader and i've been told to put away 25% of every payment i recieve for the taxman at the end of the year, does this sound right as it seems alot to me?

As you’ve just started trading it’s not yet possible to give an accurate estimate of how much you should put away for the tax man. However, if you’re paying tax at the basic rate, 25% of your income should more than cover your tax bill for the year. However you should bear in mind that as well as paying your current year’s bill you’ll also have to pay an amount on account for your next years bill so it’s probably quite wise to overestimate the amount to set aside.

Just look for the highest rate interest bearing account you can find and stick the money in there, at least then the cash won’t be sitting idle.

Regards

Joy

 

[business newby]

Thanks for the replys, when will i have to pay my tax april 2007??
Also i've spent around £5000 on a vehicle/tools/pc etc will i get a percentage of this back?

 

[Alpha]

Thanks for the replys, when will i have to pay my tax april 2007??
Also i've spent around £5000 on a vehicle/tools/pc etc will i get a percentage of this back?

If you have just set up you will complete a self assessment return for the taxd year 2006-7 sometime after April 2007 and will pay the tax based upon the return by 31/01/08 at the latest. as Joy says you will also pay another 50% of this amount at the same time as an amount towards the 2007-8 tax bill (The second 50% will be due to be paid by 31/07/08).

The costs you have incurred with regards tools, computer etc will be set off against the tax liability as capital allowances. These will be offset over a number of years.

The vehicle will be similar if it is used purely for the business. If there is private use of the vehicle the capital allowances allowed each year will be reduced by the proportion of private use.

 

[business newby]

Thanks for the reply, i'm guessing paying tax at the latest date possible is the norm so as to earn intrest on the capital sitting in the bank?