Hi, I’m Graham from Inca Chartered Accountants.
We get asked a lot about when I need to pay my taxes. Well in this video I’m going to
talk about paying tax if you are a sole trader. In the next video I’ll talk about when you
pay your tax if you run a limited company. So for the Sole Trader. Well, Sole Trader businesses tend to follow
the tax year. That’s April to April. But the government doesn’t mind if you want to run
a business up to the 31st March. The last few days of April that end the tax year is
ok from the point of view of preparing a set of accounts. You then got until January of
the following year to deliver a tax return and pay the tax bill associated with that
particular set of accounts. And it is not just tax you are going to pay, you are going
to pay Class 4 National Insurance bill as well. But in addition to that if you are a sole
trader and your tax bill is more than £1000 for the year, chances are you are going to
have to make payment on account. Now that payment on account is a contribution to the
tax year we are now in. It’s typically 50% of the bill you had from the year before and
your paying 50% of it January and 50% in July. So you are going to pay tax twice a year.
So just when you have got Christmas out of the way the tax bill kicks in and of course,
just before you about to head off on your summer holidays you’ve got a tax bill to pay. Plan ahead and remember this, if the business
has gone down from one year to the next you can actually apply to reduce the payment on
account. If business has gone up the extra tax you are going to pay it in the January.
In the next video I’m going to talk about how you pay taxes as a limited company.