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Tax timings: what to save, and when your bills are actually due
Tax bills that feel like emergencies are almost always planning problems. Three accounts and a bit of discipline fix most of it.
23 July 20262 min read
Tax bills that feel like emergencies are almost always planning problems. Three accounts and a bit of discipline fix most of it.
Tax bills that feel like emergencies are almost always planning problems. Here's what to do.
Due nine months and one day after your company's year end - 1 January if your year ends 31 March, 1 October if it ends 31 December. Set aside 19-25% of monthly profits into a separate savings account from the start, every month. Don't wait until year end. The money earns interest while it sits there, and the bill becomes unremarkable.
VAT collected from customers was never your money. Move it into a separate account each time you invoice and leave it there. Your quarterly VAT return should never be a cashflow event - if it is, you've been spending money that wasn't yours.
If you're a director taking salary and dividends, no tax is deducted from dividends at source - the bill arrives via Self Assessment on 31 January. Save 35-40% of dividends above your annual allowance as you take them, not at year end. Higher rate taxpayers are charged 33.75% on dividend income, so the buffer needs to be real.
HMRC doesn't just collect what you owe - they also collect 50% of next year's estimated bill at the same time. A £10,000 Self Assessment bill means £15,000 leaving your account in January: the £10,000 owed plus a £5,000 advance. A further £5,000 follows in July. If this is your first year of significant dividend income, plan for it explicitly - it surprises almost everyone.
Three accounts: one for VAT, ring-fenced as you invoice. One for Corporation Tax, funded monthly. One for personal dividend tax, funded as dividends are taken. No complicated systems required - just the discipline of separating what's yours from what isn't.
If you're unsure what to set aside given your specific structure, get in touch - it's a quick conversation.
Speak to the Outsourced2 team about how these updates affect your numbers.
