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| Future Tax Payments |
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"THERE MAY BE TROUBLES AHEAD " for those taxpayers not aware as to how the recent changes in the tax rules may affect them. |
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The self employed will now be aware that the Self Assessment and payment regime is based upon payments due on 31st January and 31st July. The January payment is in part a balancing payment for the last year, and part payment on account of the current year. The second payment on account is due on 31st July. |
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The changes may affect those payments even where a person's circumstances and income are unchanged. The changes to :---
can provide startling effects and, for the unwary, could lead to difficult cash flow positions. |
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Take the following example:-- A Married man paying £1500 pension contributions With Profits of £15000 for each year |
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1999/00
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2000/01
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2001/02
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| Tax & Class IV NIC liability |
£2164
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£2566
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£2896
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| Balancing Payments (31st Jan.) |
£
410
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£
330
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| Payments on account (31st Jan.) |
£1083
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£1283
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£1448
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| 31st Jan. Total Payments |
£1684
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£1778
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Payments
on account (31st July)
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£1083
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£1283
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£1448
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| For 2000/01 the person, being used to half-yearly tax bills of around £1100, if unprepared, may have to quickly organise additional funds for increases of £600 in January and a further £200 in July --- and again the following year further increases of approx. £100 and £150. Whilst there are compensating reductions in (a) the weekly Class 2 and (b) Personal Pension Payments, it would not be difficult to overlook these increases when planning the personal finances, and organising for your tax bills. | |||
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Stephen Greig (Tax Manager, Bury St. Edmunds) |
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