Just tried calculating my tax liability for 09/10. I was working in an employed position as well as starting off my book keeping practice. At the end of April 2010 I earned £10230 and according to my P60 paid £750 on tax, however I remember that I always got £1400 every month and my take home would be £1128 - so I guess the rest went on NI contributions.
Because I thought my employment earnings were sorted through my PAYE I didnt include them in my submission. My self employment figure was £5522 with £429 deductibles. I was then presented with a £255 tax liability. Going over the form again I realised that I had to include my employment as well and with this my tax liability has gone up to £1529.40!! Am I being taxed twice?? Should I have included my PAYE?
Help please
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Tayo Richards www.admin2day.com admin for today's business
No you are not being taxed twice, and yes you should have included your paye employment.
Your taxable earnings were 15752 less 429 expenses = 15323.
Your personal allowance is 6475 leaving 8848 taxable at 20% this = 1769.60 tax payable less the 750 already paid = 1019.60.
Your profits from self employment were less than 5715 so no liability to class 4 NI at 8%.
However, what the revenue do is charge the £1019.60 plus 50% as an advance payment for 2010/11 tax with a further 50% payable in July. Hence the figure of £1529.40 (I make it £1529.10 but whose quibbling about 30p)
-- Edited by semsley on Monday 24th of January 2011 11:10:42 PM
Thank you very much for the detailed explanation. I actually only earned 10,230 during that financial year (I was unemployed for some time) and not 15,752 - the £479 relates to my self employment.
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Tayo Richards www.admin2day.com admin for today's business
Your taxable earnings are 10,230 from employment PLUS 5,522 from self-employment = 15,752 Less deductions 429 = 15,323 (you had £429 at the top of the page so that's the figure I'll use)
15,323 less 6,475 personal allowance 8,848 x 20% income tax
1,769.60 less 750.00 tax deducted through PAYE
1,019.60 balancing payment for 2009-10 509.80 1st payment on account 2010-11 1,529.40 to be paid by 31st January 2011
Strange, I get the 1,529.40 not 30p out.
I know I have basically just repeated what Sheila had said - I had only started to point out the taxable earnings were Income from employment PLUS Income from self employment
Edited - for some reason I called Sheila, Bill. I'm always getting those two names mixed up.
-- Edited by Peasie on Tuesday 25th of January 2011 01:17:02 AM
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Never buy black socks from a normal shop. They shaft you every time.
Everything seems to be covered in the answers, I would echo Phil's comments as £429 does seem low.
However, I notice from your website that you provide bookkeeping and accounting services, particularly tax computation and submission - personal, corporation and partnership entities. I really don't want to sound like I'm being funny or nasty, but the scenario for you above is quite common and if you're offering tax computation and submission services, you should be prepared for these kinds of scenarios and perhaps beyond (eg what if your self employed business had made a loss?).
@GBM - I have an arrangement with an accountant who deals with all the computations etc - he's too busy dealing with the clients to have time for my computations!!
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Tayo Richards www.admin2day.com admin for today's business
