Help - Provisional Tax Payments

[a7awo]

I am a Contractor and I have my own Ltd.

Can someone explain or provide a good link that explains the process of 'provisional tax payments', when are they due and what period do I have to pay these?
My situation is that for the first time I will be going over my Personal tax threshold for 2008/2009 and so I will incur a tax bill to be paid in the tax period 2009/2010. But I have heard that the taxman will want this tax bill money earlier than 2009/2010. I have also heard that I can opt out of this scheme but then if I go over my PTax threshold again then I will be penalised by the Taxman … and I will most probably go over my PT Threshold more often now.

Cheers

[Alan @ BroomeAffinity]

Its pretty straightforward:

If, for 2007/08 (the tax year just gone), you have a tax liability arising from your SA return, payment must be made (in full) by 31/01/09. If you liability exceeds £1,000 you will also have to pay 50% of the 2008/09 liability which will be "assessed" by the Revenue as being the same as your liability for 2007/08. On 31/07/09, you will need to pay the next 50%. So the timeline would be something like this (Based on a £5k liability)


31/01/09 2007/08 liability due £5,000
31/01/09 2008/09 first inst due £2,500
31/07/09 2008/09 2nd inst due £2,500
31/01/10 2008/09 balance due £X (dependent on SA figures)
31/01/10 2009/10 first inst due £Y (dependent on SA figures - but
calculated in the same way as 08/09)

HTH.

[a7awo]

Thanks for that ...

So my when my 1st Jan tax payment is due e.g. £1200, I also need to have +1/2 the money e.g. £1800 (£1200 + 'Advance estimate payment of £600' ) and then again in the following Sept I need to have the remaining advance estimate payment available e.g. £600?

[xoggoth]

I have an outstanding liability of £1.46

The cheek of it!!

[a7awo]

Do u want to swap bills? :-)

[Alan @ BroomeAffinity]

Thanks for that ...

So my when my 1st Jan tax payment is due e.g. £1200, I also need to have +1/2 the money e.g. £1800 (£1200 + 'Advance estimate payment of £600' ) and then again in the following Sept I need to have the remaining advance estimate payment available e.g. £600?

Thats more or less correct. But the 2nd instalment is due July not September. If you suspect that your liability for y2 will be lower you can reduce the instalments by either (a) submitting your tax return now (or soon) and getting the correct liability assessed; or (b) submit an application to reduce payments on account. If you choose option (b) and it turns out you reduce it by too much, you will be charged interest on the difference. (Although, if you are in an overdraft situation, the interest charged by the Revenue is less than typically charged by the bank)

[a7awo]

Thanks. I understand now ...