Many self-employed people will find January 2023 a tough month as it is predicted that domestic fuel bills will increase again and income tax payments will be due. If you are worried that you will struggle to pay your tax bill there are two things you can do to help.
Make sure you have your tax return for 2021-22 finalised so you have a clear view of how much tax will be payable by 31 January 2023. If you are happy to pay an amount each week or month towards your tax bill you could set up a Budget Payment Plan with HMRC. You must be up to date with your tax payments (tax due by 31 July must have been paid) and not have a Time to Pay arrangement in place to pay old tax debts.
The Budget Payment Plan is set up online and you need to agree to make direct debit payments to HMRC. The second action is to reduce your tax payments on account for 2022-23, the first of which is payable by 31 January 2023. For this we need to forecast what your profit will be in the current year. If this is likely to be less than you made in 2021-22 the payments on account can be reduced.
Schedule a free appointment to see how we can help you understand your taxes and see how much money you could be putting aside each month to meet your bills.