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The time limits (Payment of tax by co.s (Quarterly installments (large co.…
The time limits
Payment of tax by co.s
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Estimated tax is payable 9 months and one day after the end of each accounting period (due date), with provisions for
quarterly installment payments for ‘large’ companies
Interest due to the HMRC on tax paid late will run from the due date to the date of payment at a rate of 3% per annum.
Interest on overpayments of tax will run from the later of the due date or the date tax was actually paid at a rate of 0.5% per annum.
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Quarterly installments
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large co.
one with a profit exceeding £1.5M based on a single company with no related 51% group companies and which prepares accounts for a 12 month period
The profit limit must be divided by the number of 51% related group companies and time apportioned for a chargeable accounting period of less than 12 months.
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The four quarterly instalments will be made in months 7, 10, 13 and 16 following the start of the accounting period
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Thus for the accounting year ended 31 March 2019 the first quarterly instalment payment would be due October 14 2018 followed by further payments due January 14 2019, April 14 2019 and July 14, 2019
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Claims
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taxpayer will claim to reduce POAs if he expects the taxable income to be lower this year than last (as last years was used to calculate the POA)
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Payment of tax
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Payments on Accounts
made if less than 80% of last years tax liability was deducted at source (unless less than £1,000, then no payments are required)
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for income tax, class 4 NIC
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calculation
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illustration
Jack’s tax bill was £10,200 - of which 2,500 was collected using PAYE
What is the amount of the POA’s?
POA 1 £3,850 (10,200 - 2,500 = 7,700/2), POA 2 £3,850