how to pay higher rate tax

[contractor79]

Hi
This year I've paid myself everything out of company meaning I've paid myself well over the £40k ish meaning I'm a higher rate taxpayer. I'm due to pay £10-12k extra tax on my tax return in January 2011.
If I don't get enough work next year I may struggle to pay this. I've committed all my funds to property and car.
Can I remortgage to pay this off if I needed to. Or borrow against my car. What other options are there.

[scooterscot]

Been there myself when I got married. The wife is now a share holder, it's won't happen again.

If I were you I'd:

1) Earn it any way you can and pay it, remember HMRC will always allow you to pay by instalments of the course of the year if you cannot manage it all at once.

2) Learn from this and for $£ @$D sake, plan plan plan...

[BolshieBastard]

Hi
This year I've paid myself everything out of company meaning I've paid myself well over the £40k ish meaning I'm a higher rate taxpayer. I'm due to pay £10-12k extra tax on my tax return in January 2011.
If I don't get enough work next year I may struggle to pay this. I've committed all my funds to property and car.
Can I remortgage to pay this off if I needed to. Or borrow against my car. What other options are there.

I'd start filing for bankruptcy.

[contractor79]

Been there myself when I got married. The wife is now a share holder, it's won't happen again.

If I were you I'd:

1) Earn it any way you can and pay it, remember HMRC will always allow you to pay by instalments of the course of the year if you cannot manage it all at once.

2) Learn from this and for $£ @$D sake, plan plan plan...

thanks
well it's not until January 2011 that I'll put the tax return in for April 09-2010

so there is 16 months to find 10-12k, could earn it if I get work but not much motivation for earning just to give to taxman

installements, that sounds good, so would that start from January 2011

[TroubleAtMill]

Does the £10-12K include the payment on account? I think you can ask to reduce it if you believe you'll be earning much less next year. Linky.

Also, are you talking about the tax year 06-Apr-2009 to 05-Apr-2010? If so, how do you know your full tax liabilities? Just interested.

[contractor79]

Does the £10-12K include the payment on account? I think you can ask to reduce it if you believe you'll be earning much less next year. Linky.

Also, are you talking about the tax year 06-Apr-2009 to 05-Apr-2010? If so, how do you know your full tax liabilities? Just interested.

don't know what you mean by payment on account
usually there is no further tax to pay when i do self-assessment as i only pay myself 12k on PAYE which I pay each quarter the tax, then I pay corporation tax so no further tax on dividends as i only pay myself less than 40k, but this tax year april09-10 I have paid myself a lot more than 40k already so the extra tax for dividends which takes me above the 40k has not been paid, I presume they will ask for it Jan 2011 when I submit tax return

funny you should mention the next tax year as I'm considering taking a year out from working and doing some studying so won't be earning but would that mean I still have to pay this 12k tax in jan 2011

[Gonzo]

don't know what you mean by payment on account
usually there is no further tax to pay when i do self-assessment as i only pay myself 12k on PAYE which I pay each quarter the tax, then I pay corporation tax so no further tax on dividends as i only pay myself less than 40k, but this tax year april09-10 I have paid myself a lot more than 40k already so the extra tax for dividends which takes me above the 40k has not been paid, I presume they will ask for it Jan 2011 when I submit tax return

funny you should mention the next tax year as I'm considering taking a year out from working and doing some studying so won't be earning but would that mean I still have to pay this 12k tax in jan 2011

If you have a tax liability on your self-assessment greater than £2,000 (I think but don't quote me on that) then you have to pay the same again in two instalments, one 12 months in advance and one 6 months in advance. This is known as the payments on account.

So in your case you would have to stump up £18,000 in January 2011 (your £12,000 for 2009/2010 + £6,000 for 2010/2011) and another £6,000 in July 2011.

It's a bit of a shock the first time.

You can apply to reduce the payments on account (form SA303) on the basis that your earnings are going to be lower but if you end up under-paying as a result you could get hit with interest and penalties.

[contractor79]

If you have a tax liability on your self-assessment greater than £2,000 (I think but don't quote me on that) then you have to pay the same again in two instalments, one 12 months in advance and one 6 months in advance. This is known as the payments on account.

So in your case you would have to stump up £18,000 in January 2011 (your £12,000 for 2009/2010 + £6,000 for 2010/2011) and another £6,000 in July 2011.

It's a bit of a shock the first time.

You can apply to reduce the payments on account (form SA303) on the basis that your earnings are going to be lower but if you end up under-paying as a result you could get hit with interest and penalties.

did you get your dates right?! this is a shocker

[Gonzo]

did you get your dates right?! this is a shocker

Yes I did.

Yes it is. Been there, done that.

[contractor79]

Yes I did.

Yes it is. Been there, done that.

so I don't pay anything until January 2011, not January 2010, right? thanks for your advice mate