Self Assessment Figure Owed - Can't Work it Out! Help Me - Please! - The Book-keepers Forum (UK)

FP125 · Member

Self Assessment Figure Owed - Can't Work it Out! Help Me - Please!

Amanda · Expert

HI Stephen,

I'm no Tax Expert so the only bit I'm sure about is the bit where they want you to pay up front for 2011. I think it is because your tax that you owe for the current year is above £1000 ( I think this was the figure haven't done mine yet for this year) so for next year they are estimating that it will be similar and are asking for an amount (£800) up front for next years tax. The HMRC are doing this more now to people as they are trying to get their money in quicker and by asking you to pay upfront this is helping them to get their money in quicker.

I'm sure someone will be on here later to advise you about the rest.

HTH
Amanda

RobH · Expert

What does your P60 gross earnings come to and your P11d benefits in kind?

Rob

FP125 · Member

Cheers for the replies

My P60 for 09/10 gross earnings were £23125 ( tax paid £3811 )

P11 for 09/10 £2745

RobH · Expert

Sorry I agree with hmrc. You have been taxed soley on your earnings. If you add the P11d figures to the rental income then it comes to £7955. 20% of that is just shy of £1600. This years coding notice relates to this years benefits in kind.

Who calculated your letting income? Have you deducted mortgage interest, wear and tear allowance etc?

Rob

FP125 · Member

Cheers

I calculated it myself - deducted the mortgage interest - everything, wear and tear, etc

This is the thing I dont understand - excuse for sounding a bit thick - bit new to me this and I am learing as I go.

With the Benefit in Kind - won't that affect my tax coding - so in effect won't I be penalised twice for this? Firstly in paying the tax figure they quoted me and secondly by paying a higher tax through my PAYE with my employer?

As long as I know the £1600 is the correct figure - thats the main thing.

Just one other thing which Amanda addressed - is that right that I have to pay £1600 PLUS another £800 for June 2011? Really going to sting me that - really didnt expect it. Did a double take when I saw the letter.

What would happen - for arguments sake - if I stopped the let in Feb - would they refund me that £800?

-- Edited by FP125 on Monday 4th of October 2010 11:11:31 PM

RobH · Expert

You haven't been double taxed. If you look at your earnings less P11d BIK then you have £23125, take away your personal allowance of £6475 and tyhis leaves £16650. Tax on that is about £3330 ish Add back the underpaid tax for the PREVIOUS year of £491 and you should have been taxed (with the adjusted tax code) £3821, which makes my quick maths about a tenner different from what you were taxed. So now you need to be taxed on this years P11d and your letting income, which we worked out at about £1600.

The payment on account is as Amanda said, hmrc expect your tax bill to be the same as the previous year and so they take half in Jan and the other half in July. If when you submit your tax return it is less then you will get a rebate. Get your tax return in early and you will not need to make both payments if it is not due. Or if you expect your taxable earnings to be less then you can submit a 'claim to reduce payments on account'

Rob

FP125 · Member

Really appreciate your time in replying to a noobie like me!

I can see from your calcs now where the £1600 will have come from - approx 20% of my net rental income and my P11 figure.

I just presumed they would alter my tax code to collect the P11 amount - they wont do this as well will they? Thats what I am worried about

Just a bit peeved about that big figure I have to pay - £2400 on Jan and another £800 by July - £3200 in all for £6600 rent.

I just thought I would get a bill for the rent payments I received - tax it at 20% - thats it, fine and dandy and my PAYE will sort out my other tax.

ADAS · Guru

FP125 wrote:

Just a bit peeved about that big figure I have to pay - £2400 on Jan and another £800 by July - £3200 in all for £6600 rent.

It's not quite as bad as that - the £3,200 is two years tax. As Rob stated above  it's what's owed for last year plus a prepayment of this years tax.

Jan 1 2011 - £1,600 2009/2010
           £800 2010/2011 on account 1st installment

July 2011 - £800 2010/2011 on account 2nd installment

Jan 2012 - Actual tax due on profits 2010/2011 less £1,600 already paid on account
            £800 on account for 2011/2012 (assuming no change in profits)

Pretty sure thats how it works.

-- Edited by ADAS on Monday 4th of October 2010 11:56:21 PM

-- Edited by ADAS on Monday 4th of October 2010 11:59:52 PM

-- Edited by ADAS on Tuesday 5th of October 2010 12:04:55 AM

PhilMcTankup · Senior Member

FP125 wrote:

When I rang to query they said .......

Judging by bad press HMRC have had lately, I'm impressed that your tax has been correctly calculated, your call was answered and you got the correct advice on the phone.

Merlion ABS · Senior Member

I know its annoying having to pay the £1600 + £800 on account towards the 2010/11 tax year and then another £800 in July 2011, but as ADAS says, if the profits for the property stay the same, then you should have no other tax to pay for the 2010/11 tax year in January 2012, but you may have to pay £800 as a 1st payment on account for the 2011/12 year.

Bit rusty on this, but cant they collect the £1600 via your tax code as its under £2000 and then not pay the payments on account?

been years since I did this so probably totally wrong heh heh.

FP125 · Member

ADAS wrote:

FP125 wrote:

Just a bit peeved about that big figure I have to pay - £2400 on Jan and another £800 by July - £3200 in all for £6600 rent.

It's not quite as bad as that - the £3,200 is two years tax. As Rob stated above it's what's owed for last year plus a prepayment of this years tax.

Jan 1 2011 - £1,600 2009/2010
£800 2010/2011 on account 1st installment

July 2011 - £800 2010/2011 on account 2nd installment

Jan 2012 - Actual tax due on profits 2010/2011 less £1,600 already paid on account
£800 on account for 2011/2012 (assuming no change in profits)

Pretty sure thats how it works.

-- Edited by ADAS on Monday 4th of October 2010 11:56:21 PM

-- Edited by ADAS on Monday 4th of October 2010 11:59:52 PM

-- Edited by ADAS on Tuesday 5th of October 2010 12:04:55 AM

Apreciate the advice and replies, really do - just getting my head round it for a first timer.

Merlion ABS · Senior Member

The first year is always the hardest, but once into the second year, its actually a good way of not having to find that big lump sum of tax owed in one go.

FP125 · Member

Sorry to resurrect an old thread but you guys helped me out last time.

Only looking at this again as got my new tax code through and was just thinking if I paid the right amount for 09/10.

I used the tax calculator here http://stccalculator.hmrc.gov.uk/UserDetails.aspx

So please bear with me to make sure this is right.

P60 Earnings - £23125
P11 Benefits - £2745
Rental Income - £5210

Total - £31080

Minus personal allowance of £6745

Amended Total - £24335

Now my P60 shows tax paid of £3811 and my Tax Calculation of 09/10 stated I owed £1600. So this means a total of £5411 in tax paid for 09/10

However when I enter my total earnings of £31080 in the calculator abovem it states my tax should have been £4921 and I am due a refund of £490.

Just anted to check with you guys before I phone the Revenue and make myself look a fool!

Would you agree I am due a refund or did I pay the correct tax?

FP125 · Member

Scrap that!

Just noticed on my 09/10 Tax Calculation, it has 'Underpaid Tax for earlier years' and the total is £491.30

Damn - was getting my hopes up!