Payment on account, 50% extra tax to pay!

[sarah7898]

I had a really great year last year, my best ever. I also used quickbooks so I knew how much tax I would be paying.
Imagine my shock when after doing my tax return nice and early, I had an extra 2.5k tax added on!
Last year's tax plus 50% of next years predicated tax.
I googled and seems to be normal but I have Never heard of this, and I've been doing my own taxes for about 3 years.

I find it so confusing, I have to pay last year's tax and half of next years tax by Jan 21, and then the rest of the next years tax in July 21. So does that then mean in Jan 22 I'll be paying just 50% of 2023s tax?

Anything I can do to change this maybe?

My brain hurts, this is when I think I need to get an accountant, it was so much simpler before when I worked fewer hours!

 

[Enchanting Beauty]

I had this 2018-2019, had to pay half of 2019-2020 tax. If you have a tax liability of £1000 or more (so when your tax bill is over this) the new ruling is they take half again.
As far as I am aware, there’s nothing you can do except get your tax under £1000 in a year. You can get a rebate though if you end up paying less tax.
It is confusing & even with an accountant,I wasn’t told about it so a bit of a shock!
Also, if you’re like me, the taxman lumped both sums together so I ended up paying the July amount in January for some reason!

 

[CFBS]

Yes, all correct and normal I’m afraid.
Me and my hubby are both self employed so what we do is pay into a savings account each month so there is a lump sum ready to use when a tax bill needs to be paid.

 

[sarah7898]

Yes, all correct and normal I’m afraid.
Me and my hubby are both self employed so what we do is pay into a savings account each month so there is a lump sum ready to use when a tax bill needs to be paid.

I just wish I knew I would need an extra 2.5k! It's a bit unfair as saving 5k is hardly an easy thing to do as it is.
Hopefully this will make others aware too x

 

[ReVivebeauty]

As has been said, its all normal. I take the view that all my takings don't belong to me, part of it is for the Tax man. So 20% of all my sales income is saved. That way when my Tax Return is completed I know that I have money put aside to pay Tax and NI contributions

 

[CFBS]

Just a thought but aren't there some opportunities to defer some tax payments under the Covid assistance?
Might be worth looking on the gov.uk website in case anything there might help your situation.