I am going round in circles and my head hurts, this is probably an easy question but here goes. I have just done a new Client's Self Assessment. He was unwell for 2 months last year so his turnover etc are down on last year. Now with the payment on accounts he made for 2011/2012 and his lower tax liability for 2011/2012,this means that he has overpaid by £122.53. He wants to reduce what he pays to HMRC due 31/1/2013 and 31/7/2013. I am fairly sure I don't put this adjustment under the section 'Adjustments to Tax' section but I think I put it on the bit where I claim to reduce the payments on account. Now my question is do I just take £122.53 divided by 2 = £61.26 and deduct it from the Payment on Account figure then put this amount in that bit, this then appears to reduce both Payment on Accounts by £61.26 x 2 , maybe I have just answered my own question, but confirmation would be appreciated. Hope I haven't confused you all :(
Thank you for your help.
-- Edited by Carrie on Monday 3rd of December 2012 10:01:55 AM
Hi Carrie, the easiest thing would be to tell the client that the payments on account will be less by the amount of overpayment anyway......... because the liability is less in 2012 than 2011.
Supposing he has a continuing illness which is likely to be more than 2 months in 2012/13, then the reduced amount goes in box 10 of the tax calculation pages. This is only entered once because POA have to equal each other.
Why they should have to equal each other is another question..... just one of those idiosyncracies which detract from the nature of 'self assessment'.
It is quite rare to have to use the 'Adjustment' boxes - farmers averaging etc.
I wonder if you can answer my question on self-assessment - it's for me and it's for 2012-13 but 2011-12. I've recently become a pensioner and I know I have to declare my pension as income. I've received the winter fuel payment and a letter that says it is tax free so I know I won't have to declare that but I've also just found that I've been paid the £10 Christmas Bonus (whoopee do) but no letter telling me if this is tax free or taxable!!! OK it's only a tenner but I do need to know whether or not I will have to add this as income or not. Any ideas?
As Liz says, the Christmas Bonus is non-taxable and watch for additional Winter Fuel or anything else paid in the same way. Of course, you wouldn't need to ask but where's the P60? Uniquely, the state exempts itself from PAYE but then burdens pensioners with SA! How ridiculous is that? Best to question everything on Pension Service letter(s).
Sorry that was more for the Chancellor's benefit but he's too busy at the moment correcting his under-assessment of the borrowing requirement. lol Tiny Tim
