Friend left the UK on 1 January 2005. House has been let out since 1 January. Is a payment on account due on 31 July for the 3 months rental income in 2004/2005? All other income taxed at source (pension, divs, interest). Or is the tax settled on 31 Jan 2006? Thankyou.
Elaine Donaldson
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No...
Simple answer I know.
The accounts need to be drawn up to 5th April each year, so the first set of accounts will be from 01.01.05 - 05.04.05. This will form the basis of the 2004/2005 tax year and the tax there-on will be payable by 31st January 2006.
If there is a sufficient profit in 2004/05 then there may be some tax to be paid on account of 2005/06. This will be equal to the tax paid in the year 2004/05. It is payable on account in the January and following July with a balancing payment the following January.
So for example, suppose your friend had tax to pay of £5000 for the tax year 2004/05 then he/she would have to pay the following:
04/05 Balance of Tax due = £5000 - pd 31.01.06
05/06 On account = £2500 - pd 31.01.06
05/06 On account = £2500 - pd 31.07.06
Hope that helps.