UK Is my tax right?

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Hi,
I have submitted expenses and invoices to my accountant and he has said I owe £9k in jan 2014 and another £3k in July, for April 2012/13.
My turn over this year was £61k and profit was £30k.
I established in June 2010 and haven't paid any tax as of yet.
Would appreciate your help.
Ben
 

Becky

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Hi Benji, welcome to the forums.

I can understand your concern that the liability looks high! The reason for this is that part relates to your 2012/13 tax liability and the rest are payments on account for the 2013/14 tax year.

I guess a little more info might be useful here: When you pay your income tax by self assessment you make your first payment on account during the tax year (31 Jan), your second payment on account is due on 31 July after the tax year, and any balance remaining is due on 31 Jan after the end of the tax year. Payments on account are made before you know what the liability will be for that tax year, and consequently they are based on the liability for the previous tax year. If you have never had a tax liability before, then you would not have been required to make payments on account for the 2012/13 tax year. From the figures you have given me, it would appear that £6k is your 2012/13 tax liability, and there is a payment on account of £3k for 2013/14 (being half of the prior year liability), both amounts due on 31 Jan 2014. The £3k due on 31 July 2014 is your second payment on account.

The first year you start to pay tax it can feel expensive at first, but it won't be like this every year.

As an aside, £6k tax on £30k profit (assuming this is the taxable profit) seems a little high. Your personal allowance for 2012/13 is £8,105 so only income above this amount would be subject to income tax at 20%.
 
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I am inclined to agree with Becky. Whilst Payment On account (POA) is a truly awful and annoying HMRC collection system, you do appear to have a fairly basic strategy and that is resulting in a high tax cost.

With some further planning, using the personal allowance as Becky suggests, claiming and offsetting expenses and then working out whether corporate planning such as pensions maybe worth considering.
 

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