January is the month when individuals and businesses are required to pay tax.
If your business is a limited company, and your tax year ends 31 March 2017, any corporation tax due for that year is payable 1 January 2018. Unlike your self-employed counterparts – see below - no payments on account are required for 2017-18.
If you are a self-employed business person, sole trader or in partnership, any underpayment of self-assessment tax, Class 2 and 4 NIC (for 2016-17) will be due for payment 31 January 2018. On the same date, tax payers in this category will need to make a possible payment on account for the tax year 2017-18. This is based, initially, as 50% of your actual liability for the previous year, 2016-17.
Which is why it’s worth taking a moment to consider what your financial results may be for 2017-18. If you consider that your self-employed profits, or other taxable earnings will be lower during 2017-18 (as compared to 2016-17) then you can elect to recalculate the payments on account for 2017-18.
We should always be on the lookout for ways to protect our hard-earned cash resources, which is why undertaking this simple review may help to take the sting out of the January tax payment.
You will also be glad to know, that if the results of this exercise show that your profits or taxable income have increased during 2017-18 (compared to 2016-17) it is not necessary to increase your payments on account for 2017-18. However, self-assessment taxpayers in this position should be aware that any shortfall between payments on account made and the actual liability for 2017-18 will still be payable, albeit later, on 31 January 2019.
If you feel that your earnings will be lower for 2017-18 we can help you crunch the numbers to see if a valid election to reduce your tax payments next year is a viable option. Every little helps.