FOR those who are self-employed as sole traders you probably know this. But I thought it was a helpful reminder from KPMG. Especially considering what looks like being a tough 2009.
If less than 80% of your final tax liability has been collected during the 2007/08 tax year, you need to make payments on account. This is for your 2008/09 tax liability. And it’s due at the end of January.
However, tax firm KPMG says you may want to consider reducing them – if you think that your income (and therefore your tax liability) will be lower in the 2008/09 tax year. Which might be the case in current economic conditions.
However, KPMG does warn that if you reduce your payments on account by too much, and your tax liability ends up being higher than the payments you have actually made, HMRC will charge you interest (and potentially penalties) on the underpayment.
As ever, have a word with your accountant.
Tax payment deadline