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Dividend tax >> All Ltd Co contractors to payment on account....

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    Dividend tax >> All Ltd Co contractors to payment on account....

    In view of the recent rising costs with the higher dividend tax I decided to submit my self assessment directly via hmrcs website, rather than paying £150 for the privilege of having someone else do it.

    Computations all look right apart from one stinking issue. The website has decided that I should now be coughing up half of the estimate for the current tax year in addition to last year's bill, IE it's putting me on payment on account.

    I always thought this was a special reprimand for those who were put on the naughty step...

    In many years of contracting I've never been doing POA.

    Reading up on it seems that the deciding factor about whether you have to go through the POA rigmarole 80% of your income has tax deducted at source. Given the new dividend tax tips people over this, then surely it is going to bring huge swathes into POA? Every contractor who operates low salary and dividends up to the HR threshold is suddenly caught by it.

    Any way of avoiding POA (without taking much lower divis) or is it not as bad as I'm anticipating?

    Is letting hmrc have the money by adjusting my tax code a better option?

    #2
    You can reduce the POA amount. However if you get it wrong, you could be charged interest on the difference between what you did pay and should have paid.

    Do you have an accountant? Normally they’ll do one directors self assessment for no extra charge.
    See You Next Tuesday

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      #3
      Originally posted by Lance View Post
      You can reduce the POA amount. However if you get it wrong, you could be charged interest on the difference between what you did pay and should have paid.

      Do you have an accountant? Normally they’ll do one directors self assessment for no extra charge.
      I wasn't aiming to lower the POA. It's not really the cashflow that bothers me but the administrative burden especially when having to deal with hmrc to reclaim overpaid tax. Are there any ways to avoid it outright?

      No I've cut down to a year end only service. Technically the bundled-in directors self assessment could be viewed as a BIK.

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        #4
        Every contractor I know pays POA, if you don’t you probably aren’t earning/paying yourself very much.

        No need to worry about reclaiming any overpayments, as soon as the next tax return is filed HMRC return any overpaid tax.

        Get your tax return filed ASAP after the end of the tax year and it makes it more efficient in managing your payments.

        Btw, whilst filing your own return is relatively easy on the HMRC website if you are not fully sure about what you are doing you could be making some costly mistakes!
        "The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work, instead of living on public assistance." Cicero

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          #5
          Originally posted by MrC View Post
          I always thought this was a special reprimand for those who were put on the naughty step...
          Nope, it's a pretty routine charge these days.

          Originally posted by MrC View Post
          Given the new dividend tax tips people over this, then surely it is going to bring huge swathes into POA? Every contractor who operates low salary and dividends up to the HR threshold is suddenly caught by it.
          Yes.

          Originally posted by MrC View Post
          Any way of avoiding POA (without taking much lower divis) or is it not as bad as I'm anticipating?

          Is letting hmrc have the money by adjusting my tax code a better option?
          It's a cashflow issue, nothing more than that. If you overpay, you get a refund at the end of the year; if you underpay then you pay more.
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          Comment


            #6
            Originally posted by MrC View Post
            Technically the bundled-in directors self assessment could be viewed as a BIK.
            Technically if it's a bundled-in self assessment, it has zero value because it is bundled in. So even if that was true, the value is £0.
            Best Forum Advisor 2014
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              #7
              First time when I had payment on account I thought it was total BS.

              I still think so

              Comment


                #8
                Originally posted by TheFaQQer View Post
                Nope, it's a pretty routine charge these days.



                Yes.



                It's a cashflow issue, nothing more than that. If you overpay, you get a refund at the end of the year; if you underpay then you pay more.
                Getting the £2k they owed me this year was like getting blood out of a stone.

                First they issued a cheque which they promptly blocked, then they were doing a transfer into my account (that didn't happen) then I got another cheque. 3 months it took.

                Kafkaesque is the word that springs to mind.

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                  #9
                  Originally posted by Waldorf View Post
                  Every contractor I know pays POA, if you don’t you probably aren’t earning/paying yourself very much.
                  When I was contracting in the late 90s, while still resident in the UK, I made POA.
                  Down with racism. Long live miscegenation!

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                    #10
                    Of course you’ll need to make POAs. Why is this a surprise? Why should you get at least 9 months credit terms to pay your tax bill when most people have to pay tax each time they are paid? Even with POAs you’re in a better position than somebody on PAYE.
                    Last edited by TheCyclingProgrammer; 14 October 2017, 22:06.

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