Budgeting for the tax bill and Interest on early payment of tax

How to save for the tax bill ?


1.0 Budgeting

A usual question is how to budget for the tax bill at the end of the year.

HMRC has helpfully created a calculator (Link) which can estimate the amount of money an individual should save to pay their tax bill.

2.0 Saving mechanism

Now the question arises how to save this money.

2.1 Self-Assessment (Income tax) – No interest is paid for early payment. So in case an individual client wishes to save for their tax bill it is advisable to save in a bank where they can earn some interest before tax is due.

2.2 Corporation tax – Yes, interest is paid for early payment but the earliest date HMRC will pay interest from 6 months and 13 days after the start of your accounting period. So again it is advisable to save in a bank account. Though, in practice I have rarely seen Company director’s saving for tax. Businessmen usually have more projects than funds available!

Source:

For Corporation tax

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