Self employed tax question, U.K. answers only please?

Question

Hi, i'm a registered childminder and as such I am self employed. Can anyone give me a rough idea of how much my tax bill for april 2008 will be if I earn £12,500 this year. My tax code says I can earn £5225 before tax and obviously there are various things I can take into account such as food, elec and gas. Any help would be appreciated as the guy at the IR who I spoke to was a waste of air!!
Cheers,

Answer 1

I assume that the £12,500 figure represents the fees you are likely to charge. You will need to estimate your net profit after deducting the business expenses. It is difficult to give a general figure as they will vary between businesses. Just make sure that all the expenses which are wholly business are claimed.

Assumingyou have an idea of your net profit for the tax year 2007/08 then you calculate the amount payable like this -

The first £5,225 is covered by your personal allowance.
The next£2,230 is at 10%, and the rest is at 22%

You will also have to pay Class 4 national insurance which is 8% of the net profit over £5,225. So you could just change the above percentages to 18% and 30% to cover this.

One other point is that the tax is not due in April. You are due to make a payment on account at the end of January 2008. This is capped at 50% of the tax bill for 2006/07 that was not covered by tax deducted at source. If you were employed under PAYE for that year then the interim payment will probably be nil. A further interim payment (equal to the January one) is due on the 31st July 2008. If there is still tax due (once you have submitted your figures for 2007.08) then the balance is payable on 31st January 2009.

The whole subject can get quite complicated. You may have to ask again if you want specific information about what you can claim for or when payments will be due.