Will I be taxed on money in my current account?

K

KathScan

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Will I be taxed on money set aside in my current account?

I don’t know if I have this in the right section. Forgive me if it isn’t.

My main income is from PAYE but I also have a small farm. I recently took out a mortgage. I have been trying to build up a few thousand pounds in my current account so that I would make sure of having enough to meet my monthly repayments. I am also being cautious in case the job I am in comes to an end and it could be a couple of weeks before I start work again. Therefore I would like to have a few months payments left aside as a contingency.

When the accountant is preparing my accounts, will having this money in the bank account result in a greater tax liability?

Thanks.
 
Income tax will be charged on income, not based on what you have in the bank. Your accountant will prepare a profit/loss statement. You are taxed on profit, not on savings if I understand you correctly. Why not put money on deposit and let it earn something for you?
 
KathScan said:
My main income is from PAYE but I also have a small farm.
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Given your (slightly complicated) tax situation it may be worth seeking tax advice from a professional. While the advice re your savings is quite simple, many other tax issues may/have popped up where advice from a professional may help you ensure compliance or help you minimise tax liability.
 
Thanks to you all. I just wanted to make sure it wouldn't be a problem down the line.
 
The answer depends on the source of the money in your account. If it is from profit on a self employed activity, such as your farming activity, then it could be taxable, I say “could” because you may have losses from a previous year that may wipe out the taxable income in the current year. Your accountant is the best person to advise you. The one thing that you must make sure of is that you do not leave yourself exposed to penalties and interest by Revenue down the road.
 
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