January 2012 Tax Liabilities

Having just paid your 2010/11 installments you can be forgiven for not having your tax liabilities at the forefront of your mind. However you need to consider the position in respect of your next tax payment due on 31st January 2012 being any balancing adjustment for 2010/11 and payment on account for 2011/12.

If your taxable income for the year which forms the basis for 2010/11 (i.e. 31st March 2011) is in excess of £150,000 then you will become liable to the new 50% rate of tax. This will mean that even if your income has not changed, on any taxable income over £150,000 you will be paying an additional 10% tax for 2010/11 together with 5% on account for 2011/12 which means that you will have an additional 15% tax to pay on 31st January 2012.

If your income in the year forming the basis for 2011/12 is likely to fall you also may need to consider a reduction in your payment on account on 31st January 2012. This is difficult to calculate especially if the relevant year end ends after this date (i.e. 31st March 2012) in which case our advice is pay your tax on 31st January 2012, prepare your accounts as soon as possible after 31st March 2012 and adjust your tax on 31st July 2012