Can someone please tell me if i am paying to much tax.
Im a sole trader with accounts to 31 May 2009
My net profit for Y/End May 09 is 12764, i have then added added back disallowable expenditure of 1332 (dep'n) this gives me 14096. During the year a van was bought for 5006 which i assume i can claim capital allowance of 50%. My general pool has a balance at the end of the year of 3200 and a small pool has 220.
My net profit for y/end May 08 was 9996 and my tax code is 747L.
Can someone work out roughly what my tax for the year should be. My accountant has given me a huge figure which i believe to be extremly high.
The figure in which my accountant has given me is Jan 2011 i had to pay £1728 and i have to pay a further £1025 in July. Does this seem correct?
Please can someone explain how you think he has got to this figure.
Don't really know where you get the tax figures from or where the tax code comes from, but I get your 2010 liability as:
14,096 - 5,006 = 9,090
Tax = 523 NI = 270 Total = 793
Van would qualify for 100% capital allowances.
There could be more to come off, as i don't know whether the £3,200 & £220 are before or after allowances.
Oh, think your tax code may be for 2011-12 - it was put next to figures for May 08 which threw me!
I don't think there's enough info to reconcile the tax figures you give - others may have more patience than me to try and reconcile - but if you're asking on a forum like this for a complete stranger to explain your tax calculation, think it may be time to change your accountant!
Not easy to calculate this without knowing more figures, but doesn't look right on the basis of the information you have provided.
If you bought a van during the year, did you also dispose of one. Are the pool values mentioned in your post before or after capital allowances for the year.
You would need to remember that the payments your accountant is advising you to pay include the 50% payment towards 2010-11 as well as the balancing figure for 2009-10.
Have you asked your accountant to explain the calculation behind the tax figures? They would be able to provide you with the workings, which would help you (and us) know if it is right. I agree with Nick, if you can't ask your accountant these questions, you need to think about whether they are the right accountant for you.
Agree with the above that it needs more information to be certain; however, it does seem high.
You have mentioned that you have a tax code, which would indicate to me that you have some employed income, therefore any additional self employed would be on top of your normal salary so payable at basic rate, plus NIC.
I also agree that you should be asking your accountant for an understanding - that is what you are paying for!
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Did you pay any payments on account last year ie, Jan 10 and July 10? I would imagine you did.
If you did then the Jan 11 payment of £1728 (based on your July 11 payment due) will be split between the balance due on the year done of £703 and the 1st payment on account of £1025 (=£1728), then you have the 2nd payment on account due in July 11 of £1025 as you have stated.
how your still following.....This gets tricky!
now basically what you are paying in Jan 11 and July 11 in total means that your total tax liability for the year done is the sum of the 2 payments = £2753 in total.
This figure will include Class 4 NI of 8% on £3375 (your taxable profit of £9090-lower limit of £5715) so total class 4 NI = £270
We take the NI off the total amount payable of £2753 so (£2753-£270) which gives a tax liability of £2483.
Based on your figures the Tax should be profit of £9090, this less your personal allowance of £6475 = £2615 taxable at 20% = £523
So in total your tax and NI payable should be £523+£270 =£793 as qbm has worked out above.
As your liability is below the payment on account threshold, I cant see where the payments on account of £1025 have come from so it either looks like something is amiss from the info you have provided or your accountant has possibly made a balls up which can happen but seems unlikely.
Not much help I know but it might make you understand what has happened and where the numbers come from.
