Friday 9th January 2009 Blog

Planning January 31 Tax Payments

Remember remember 31 January, because that's when your clients biggest tax payment is due, particularly if they trade as a sole-trader or partnership. Your clients will need to pay any balance of tax due for 2007/08 by that date, and at the same time make the first payment on account for the tax due for 2008/09.

If their business is not run through a company, the profits are taxed in the tax year in which their accounting period ends. Say your clients accounting period ends on 30 June 2008, the profits for that period are taxed in 2008/09, and the first instalment of that tax is due on 31 January 2009. Where this accounting period has produced much lower profits than the previous year, or even a loss, they can elect to reduce their 2008/09 tax payment on account. But be aware that your client will be charged interest on any tax that is later found to be underpaid.

It is very important to plan for this big tax payment, and if your clients think they won't have the funds to pay the full amount due, they should contact the Tax Office as soon as possible. There is now a new helpline number devoted to these sorts of problems: the Business Payment Support Service on 0845 302 1435, which is open every day from 8am. This service is staffed by tax officers who can arrange to spread their tax payments over a reasonable period. They can also deal with payments of VAT, PAYE, NI and corporation tax.

Posted by: Bookcert Mentoring Team

Friday 9th January 2009

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