UK Tax
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Answered in 51 minutes by:
6/22/2010
Sam, Accountant
Category: UK Tax
Satisfied Customers: 17,151
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Capital Gains, CIS ask for Sam Tax
VerifiedHi JACUSTOMER
Thanks for your question
This is up to you - you can either have the pension paid tax free - which will use £4000 of your tax free allowances - leaving £2475 to be used against your self employed income (assuming you are under age 65)
Or you can pay 20% tax on your pension - which would reduce your payments by £66 a month - but when you submit your self assessment tax return - you would have the full £6475 allowances available
The decision is yours - either way you will still have a tax bill that will lead you to have to pay a bill - and as your total tax liability for tax and Class 4 National Insurance is less than £1000 - you should not be paying any money in advance (payments on account) as this is only for those whose total liability is in excess of £1000
Your total liability would be
Income £10000
Less personal £6475
Liable to tax £3525 x 20% = £705.00
PLus Class 4 National Insurance £22.40
Total liability £749.80
(Class 4 Self employed income £6000 less exemption £5720 = £280 x 8% =£22.40)
So its down to what suits you
Pay most of the tax now - or most of the tax at the end of the year
Thanks
Sam
Thanks for your question
This is up to you - you can either have the pension paid tax free - which will use £4000 of your tax free allowances - leaving £2475 to be used against your self employed income (assuming you are under age 65)
Or you can pay 20% tax on your pension - which would reduce your payments by £66 a month - but when you submit your self assessment tax return - you would have the full £6475 allowances available
The decision is yours - either way you will still have a tax bill that will lead you to have to pay a bill - and as your total tax liability for tax and Class 4 National Insurance is less than £1000 - you should not be paying any money in advance (payments on account) as this is only for those whose total liability is in excess of £1000
Your total liability would be
Income £10000
Less personal £6475
Liable to tax £3525 x 20% = £705.00
PLus Class 4 National Insurance £22.40
Total liability £749.80
(Class 4 Self employed income £6000 less exemption £5720 = £280 x 8% =£22.40)
So its down to what suits you
Pay most of the tax now - or most of the tax at the end of the year
Thanks
Sam
Hi
Yes I can confirm its £1000 - see link here and scroll down to payments on account
Quote "You'll have to make payments on account if your previous year's tax was over £1,000 "
Thanks
Sam
Yes I can confirm its £1000 - see link here and scroll down to payments on account
Quote "You'll have to make payments on account if your previous year's tax was over £1,000 "
Thanks
Sam
Sam, Accountant
Category: UK Tax
Satisfied Customers: 17,151
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Capital Gains, CIS ask for Sam Tax
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