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Self Employment Starter - Questions

Mainly administrative understanding questions regarding a self employement starter.

Hello Happy People!

Hope all is well and you are enjoying your Christmas's!

Trying to help a friend out who has started as a Sole Trader get his tax affairs in order and have a few questions if anyone can offer insight please? My self assessment is rather rusty...

Background:

Works in construction industry.
Employed to the Sep 17.
Self-employed (sole trader) from Oct 17.

Has registered with HMRC for self assessment and has received a UTR - required for CIS tax deductions @ 20% by the individuals contractor (being a subcontractor).

Questions:

1) As registered in the 2017/18 tax year any Income Tax / National Insurance will be due on the 31st Jan following the end of the tax year i.e. 31st Jan 2019 - is this correct?

2) How will amounts taken as CIS tax (20% on labour) be utilised against his Income Tax bill? I assume that any deductions made in the 2017/18 tax year will be deducted from the Income Tax bill and thus a balancing payment (or refund) will be due on 31st Jan 2019?

3) As in the CIS tax scheme will payments on account (31st Jan 2019 & 31st Jul 2019) still be required? I am unsure how CIS tax deductions affect the payment on account processes.

4) Given employed until Sep 2017 he has paid Income Tax already for the 2017/18 tax year. Given the return and balancing payment is not due until 31st Jan 2019 is there any risk of HMRC refunding the income tax paid? Or will their system note the individual as being self-assessment registered thus 'hold' the Income Tax paid to utilise against the balancing payment 31st Jan 2018?

5) A modern world question! The individual has registered with HMRC online services - has both a 'Personal' tax account and a 'Business' tax account. Given the individual is a sole trader I find it odd there is a distinction! Is this usual? I assume any self assessment return will need to be filed on his 'Personal' tax account?

Many thanks in advance for any insights.

Merry Christmas :-)

Coeus.

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By Matrix
14th Dec 2017 23:57

You mean 31 January 2019. If he sends in his P45 he may be able to get a refund now. I doubt he will ever have to make payments on account, he would probably be in a tax repayment position.

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By Coeus
to Matrix
15th Dec 2017 07:13

Thanks Matrix.

Correct meant 31 January 2019 - corrected my original post.

Why one shouldn't write these things late at night! :-)

Regards,

Coeus.

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By DMGbus
15th Dec 2017 07:53

Regarding the question:
" A modern world question! The individual has registered with HMRC online services - has both a 'Personal' tax account and a 'Business' tax account. Given the individual is a sole trader I find it odd there is a distinction! Is this usual? I assume any self assessment return will need to be filed on his 'Personal' tax account? "

I have a CIS client with two accounts - he set up a personal (Individual) account for SA then when he recently started making payments to s/cs he had to set up a business account (as an Organisation) as a CIS scheme could not be added to his individual / personal account.

One further quirk of these two types of account is that whilst he could instantly appoint me as agent for CIS from his Organisation (business) account but no such option showing on his account as an individual for SA.

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15th Dec 2017 09:28

If he has a refund of his CIS tax due, it'll be repaid on submission of the return. He's no need to wait until January.

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