Self-employed people have been offered a way of reducing their tax liability if their income has taken a dive during the recession.
With the second payment on account deadline just a fortnight away, many sole traders will be facing an estimated bill from HMRC based on last year’s income.
If trade has been much slower this year they are in fact eligible to make a reduced payment.
However, Geoff Everett, of accountancy firm Smith & Williamson has warned tax payers that they should assess their income carefully before applying for a reduced payment on account before the July 31 deadline.
He said: “While a reduction in the July payment will help to ease cashflow – which is clearly very helpful for anyone who has suffered in the downturn – it’s important to get your calculations right. If you reduce your tax payment below the final liability, interest will be charged from the date the tax payment fell due.”
Self-employed people who believe they may be eligible for a reduced tax payment this July can apply by filling out the SA 303 form available on the HMRC site here.
The July 31 deadline is also when a subsequent £100 penalty will be issued to anyone who has yet to submit their tax return for the 2007-08 tax year.
© Crimson Business Ltd. 2009
