Recent Articles
BakerTilly Newsletters
Featured Headlines
| Tax Corner #3: I’m self-employed |
 |
 |
(as published on the Gibraltar Chronicle) What’s self-assessment?Under the new Income Tax Act the onus is on all taxpayers to make the right returns and payments by the right time. You can’t just wait for the Income Tax Office to catch up and assess you as happened before. Late payment of amounts due, even by a day, will mean an automatic surcharge. When are this year’s accounts due to be filed? The new Income Tax Act applies to the first set of accounts which have a year-end date in 2011. So, with a 30th June year end, your accounts for year ended 30th June 2011 need to be submitted to the Income Tax Office, with your tax return for that year, by 30th November 2011. All self-employed persons now need to prepare accounts to 30th June each year – if your year end is different, speak to your accountant or to the Income Tax Office. What about previous accounts? The new Act’s deadlines do not directly apply to those. However, we understand that the Income Tax Office will not accept gaps between older years and the current year. So they would not accept your 2011 accounts without the previous ones being brought up to date. When is my first payment of tax due under the new system? This is due by 30th November 2011 – the same deadline for filing your 2011 accounts. It’s a payment of the tax on your profits for the year ended 30th June 2011. Any payments on account would be deducted from this. It’s likely that you’ve received an assessment for tax year ended 30th June 2011 (2010/11) under the old system. So if you’ve paid that, part of it would be treated as a payment towards the amount due by 30th November 2011. So when are payments on account due? All self-employed persons have to make payments on account by 30th June and 31st December each year. This applies from 31st December 2011 onwards, so no self-assessed payment on account under the new system is required by 30th June 2011. These payments are towards the tax due for the tax year in which you make the payment. So the payments due by 31st December 2011 and 30th June 2012 are set against the tax liability for the year ended 30th June 2012. How are the payments on account calculated? Generally, these payments are based on your tax liability for the previous tax year. 50% is due by 31st December, and 50% by the following 30th June. If you think that this would mean an overpayment of tax, for example, because last year you made a healthy profit, but this year profits – and therefore tax – will be lower, you can apply to make a reduced payment. However, be careful – surcharges will be imposed if it turns out that extra tax should have been paid. When you submit your accounts and tax return – by 30 November - you have to pay any remaining tax liability for the tax year ended five months ago, or may be due a repayment. |