Idiotly stupid

Freelancers face being “left out of pocket” because tax plans that would result in the self-employed paying regular monthly tax bills as if they were employees, according to new polling.

Two in five freelancers would be left struggling with cash flow if proposals for a monthly or quarterly pay-as-you-go tax regime came to fruition. It would require the self-employed to pay tax in advance, based on their profits from the previous year.

I’ve had $200,000 years. I’ve also had $30,000 years.

So the intention is that I should pay tax on $200k in a $30k year?


15 thoughts on “Idiotly stupid”

  1. When I was self employed the revenue got shitty with me when a bad year followed a good year. It was like dealing with the mob, “Where’s our money?” And “How is that our problem?”

  2. As it is, the self-employed get assessed for next-year’s tax, half of which is demanded at the point of paying the second-instalment of this-year’s. OK, you can apply to have it reduced, but I don’t think that it’s an automatic function.

  3. I am PAYE. The revenue wanted a payment in advance as I’d changed jobs, got paid a shed load more money but also had the payout from the prior job. Yeah. That was a typical year… not. Easy enough to fix with a request but a right PITA to not have the system recognise such a common situation.

    They’re clearly worried about the path to bankruptcy and not getting their pound of flesh.

  4. Just a specific case of the general rule that many features of the tax system suit civil servants who get secure monthly income and therefore can’t really appreciate other sorts of money-making. It’s just an emotional-cum-intellectual limitation they have.

    The answer of course is to take lessons from the Admiral Byng case.

  5. “Cretins” is unduly flattering. You seem to assume that this is unintended.
    The bureaucracy hate the self-employed

  6. How’s that going to work in farming then? How much ‘profit’ have I made in January when all the crops are in the grounds (a lot of money having been spent to get them into the ground the previous autumn) and won’t be generating any income until August/Sept at the earliest and maybe not until after the next Christmas? Indeed until the crop is harvested successfully I’m sitting on a massive loss. Do I get a refund from the tax man for negative income in that quarter?

  7. “Do the self employed in the UK not pay estimated income tax during the year?”

    Yes, but slightly in arrears. You pay two ‘Payments on account’ (which are an estimate of your tax owing, based on the previous years declared income) on the 31st Jan and 31st July each year, but those payments relate to the tax year that started in the April the year before. So one payment is within the tax year in question, one is four months after it has finished.

    If HMG is so desperate for cash that it needs to draw forward tax payments by about 6 months on a one off basis, I think it needs to look elsewhere for the solution to its woes……..

  8. We need away to stop the tax thieves. Indirect tax thieving is the trouble. All these eco taxes on salt/sugar/meat etc are taken via the suppliers –who don’t have the balls to refuse. We need a calculator to work out how much they cost us so that amount can be deducted off council tax. And also we need to stop paying the “green” surcharge on our energy bills. 11% I believe. If we stop paying in large numbers e-suppliers still keep their same monies but inform the scummy state that the public wont pay the green scam so they cant pass it on.

  9. @ Mr Ecks
    In your dreams!
    If I refuse to pay the whole street gets penalised, if I refuse to pay the EA levy any race I run is told that it is uninsured.
    The XR yobs get away with it because the media pretend that they are noble.
    The Orange Order do actually stand up to be counted because they have seen the IRA murder their neighbours and relatives. The Countryside Alliance made a brief fuss but not paying your bills will get you nowhere – you have to be a media poster boy to get away with it.

  10. @John77
    Didn’t our chums over the Atlantic find a way of resolving tax disputes with government?

  11. @John77

    if I refuse to pay the EA levy any race I run is told that it is uninsured

    – could you elaborate some detail there – or is that just a generalisation?

    I note that the levies don’t apparently apply to the ever changing flock of smaller suppliers who fall under the ofgem threshold for Green larceny – giving them a 10% padding to play with.

    One rule for all NOT

    One pal of mine tried to get SSE to detail the payments in his billing (for 18 months) – they didn’t flat out refuse but they nontheless didn’t oblige via non replies and customer service “reset” antics.

  12. So the intention is that I should pay tax on $200k in a $30k year?

    Welcome to business taxes in the US. On the plus side you can get it back.


  13. @Jim

    Over £8 billion snaffled from HMRC / the public purse stolen by gang with links to well known terrorists and Tony Blair….

    The files show four HMRC investigators pleaded with bosses to prosecute the crimelords but were rebuffed – and one claims he was prevented from sharing HMRC data with MI5 because the Revenue wanted to maintain the confidentiality of the terror suspects’ tax records.

    That “Rolls-Royce” public sector “at it” again.

    Surprised that one hasn’t been memory holed.

  14. Back in the day ( and this is in NZ) I was self employed and paid provisional tax. You were usually taxed as if you earned the same as the previous year and settled up any differences at the end – so if you had a really good year you underpaid all year and paid the additional amount in June the following year (normal EOY was 31 March) without penalty.

    If you were having a bad year you could elect to pay less than the assessed tax (you provided an assessed annual income and worked out the tax on that) but if you under estimated, any under payment on your final declared profit that resulted had a penalty (10% from memory for smaller amounts, no idea what it is now) added.

    Never affected me as I managed to increase my earnings for the years I was self employed so always paid the assessed amount and settled up at year end. But the option was there. You could also I believe change your assessment, so if you had a bad first quarter and decided to assess low, then Q2 was excellent, you could change your assessment and pay more for the next provisional instalment and avoid most of the penalties.

    Put you in a similar position to PAYE wage and salary earners ultimately, and once the NZ tax system was simplified. not hard to understand or manage.

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