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Budgeting for tax: HMRC guidance

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A new HMRC leaflet is designed to help the newly self-employed budget for their first tax bill. A table ‘will show you how much money to set aside to meet your tax and Class 4 NIC bill,’ HMRC said.

The ICAEW Tax Faculty suggested that the guidance ‘rather oversimplifies the position’ because it does not explain the system of payments on account.

The table uses estimated weekly or monthly profit figures and is based on a self-employed person who has no other taxable income and is entitled to a basic personal allowance. Class 2 NICs are excluded.