Paying tax is certainly one of the most unpleasant things about being a grown-up; most of us do it, certainly all those of us who work for a living, and even some of those who don't, and however much we would prefer to keep all of our hard-earned cash, we resign ourselves to the fact that without taxation our country would not function.
We may not agree with how much we pay, but we accept that we do have to pay something.
If we are employed in the UK our employers are responsible for deducting our tax along with our NI contributions under the PAYE system, but if we are self-employed this responsibility fall squarely on our own shoulders.
Self-employed workers have to ensure that they pay the correct amount of tax themselves and that the details they provide to HMRC each year are accurate.
This system of taxation is known as 'self assessment' and although many self-employed people employ accountants to do the actual calculations, they are ultimately accountable for declaring their earnings and paying whatever tax is owed.
If you are self-employed the first step you must take is to notify HMRC.
Each year you will be expected to complete a self-assessment tax return; HMRC prefer this to be done electronically online if possible, as it helps people to avoid missing the deadline because it is quicker; it is also a more secure way to provide the information.
Late payments will result in interest being charged, which is simply another way of saying that you'll be penalised if you don't pay on time; this penalty charge will automatically be added to with a 5% surcharge on top of what's owed if your balance hasn't been cleared within 28 days and another 5% surcharge after 6 months, so prompt payment is recommended.
One of the things that concerns people the most when they know that they have to use the self-assessment system to pay their tax is the possibility of not having the money available to pay at the end of the tax year; not everyone is disciplined enough to set aside regular amounts and to leave them untouched in a separate account until assessment time and sometimes, even those that are find that they have to draw on this money for emergencies.
There is however an alternative to paying everything at the end of the year; many self-employed people using the self assessment system opt to pay using a 'budget plan'.
The Budget Plan is a very flexible way to pay, as you can decide to pay monthly or weekly and to set an amount which can be changed when you wish; it allows regular payments throughout the year that count towards your end of year bill; providing that you are not in arrears and have a direct debit in place, this option can mean that come assessment time you have satisfied your tax requirements or certainly reduced them a good deal.
When it comes to choosing how to pay direct debit offers the easiest option, as it prevents missed payments and allows you the advantage of doing everything electronically.
In truth self assessment is nothing to be concerned about as it actually offers a more convenient way for busy self-employed workers to pay their taxes.