Contractors who pay their tax in two annual instalments can ask the Revenue to revise their July 31 tax payment, which could slash their tax bill says giant group plc, the contractor services provider.
Thousands of contractors paid up to 50% of their tax for the 2004/05 tax year on January 31. The remaining 50% must be paid to the Revenue by the end of this month.
Contractors should recalculate their tax liability prior to making the final payment advises giant group. This is because lower income for 2004/05 may mean the final amount of tax due is far lower than the original calculation.
Comments Matthew Brown, Managing Director, giant group: Contractors should look at whether their actual income for the tax year corresponds to their initial calculation. This is something far too many taxpayers neglect to do but for contractors itís particularly important as earnings can vary significantly during the year and initial projections are not always accurate.
If circumstances change the tax due for the 2004/05 tax year could be lower, which would justify a reduction in the July 31 payment on account. This can be done by letter or by sending form SA303 to Revenue & Customs.
Taxpayers that fail to meet the July 31 deadline for their second instalment will be charged interest at the Revenueís rate of 7.5%. The Bank of Englandís interest rate is currently 4.75%.
Matthew Brown says that many contractors will not realise that Revenue & Customs interest rates are so high and could be in for an unpleasant surprise if they donít make the July 31 deadline.
The disparity between the rate of interest charged by HMRC and that set by the Bank of England is quite dramatic. Itís money for nothing from the taxmanís point of view, he says.
Contractors have until the end of the month to ask Revenue & Customs to reduce their tax
Second tax instalment for 04/05 tax year due July 31 7.5% interest on late tax despite interest rates being just 4.75%
