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TonyTax
TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I am just completing my partners tax return for 2012-13. He

Customer Question

I am just completing my partners tax return for 2012-13. He job was as a Security guard on ships in the Indian Ocean. He was only out of the country for 134 days during 2012 -13 as he left his job in November 2012. He did not start work again until October 2013. The online calculation is that he now owes over £8k in tax on earnings of just over £42k. Is there anything he can do to reduce this amount due to the fact that he was unemployed for almost 6 months of the tax year? Any advice would be appreciated. Many thanks
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
Hi.

Do you know if your partner paid no tax in earlier years as a result of his qualifying for the seafarer's earnings deduction? Was he employed or self-employed when he worked on the ships?
Customer: replied 2 years ago.

He was exempt from tax for the two previous tax years due to SED. He was employed when he worked on the ships (via a company called MSOL Services Limited, based in Jersey) He would invoice them and then they would invoice the company (PVI Limited)

Expert:  TonyTax replied 2 years ago.
Thanks.

Leave this with me while I draft my answer.
Expert:  TonyTax replied 2 years ago.
Hi again.

Unless you have done so already, you will need to work out whether your partner qualified for the SED for the 2012/13 tax year by completing the worksheet you can find in the HMRC helpsheet HS205. There are some notes from the HMRC site here. I could help you with the worksheet but you would need to provide me with the complete history of your partner's period of working on ships and his stays in the UK.

If your partner did not qualify for the SED for the 2012/13 tax year, then I'm afraid that there is nothing you can do now to reduce his 2012/13 tax liability. If the tax calculation is saying that he needs to make payments on account for 2013/14, you can apply to reduce these to a more appropriate level as he didn't start work again until half-way through the 2013/14 tax year so his tax liability if he has one will not be as much as that for the 2012/13 tax year.

I hope this helps but let me know if you have any further questions.
Customer: replied 2 years ago.

Hi,


 


Unfortunately he doesn't qualify for SED as he was not out of the country for long enough.


 


He is now employed in the UK and pays tax via PAYE, will that mean he doesn't need to make any payments on account?


 


Finally, will he be eligible for a tax refund for the 12/13 tax year, seeing as he only worked half of it and was on a NT tax code, therefore didn't receive any form of allowance?


 


Many thanks

Expert:  TonyTax replied 2 years ago.
You should reduce the payments on account for 2013/14 to 0 if your partner will have no tax to pay for that year other than what he pays through PAYE.

An NT tax code means "No Tax" which would have been correct if he qualified for SED. He will still get the benefit of a full personal allowance for 2012/13 and it should show on the tax calculation (£8,105) but that fact that he didn't pay any tax on his 2012/13 earnings will still leave him with tax to pay if his earnings were £42,000.
Customer: replied 2 years ago.

Many thanks for this. I can't seem to see where his personal allowance has been taken in to account. Also I can't see how to change the payment on account sum to zero... are you able to point me in the right direction?

Expert:  TonyTax replied 2 years ago.
Are you using the HMRC tax return software?
Customer: replied 2 years ago.

yes

Customer: replied 2 years ago.

the online version...

Expert:  TonyTax replied 2 years ago.
IThanks. I'll get back to you with directions.
Customer: replied 2 years ago.

Many thanks

Expert:  TonyTax replied 2 years ago.
Hi again.

Assuming you have entered all the income details, you should have reached Section 6 (View your calculation). If not, click on the link on the left of your screen. The summary is just that, a summary. All it shows is what tax is due for 2012/13 and the payments on account for 2013/14.

Click on "View and print your calculation" at the bottom right of the screen. That gives you a more detailed calculation which should show the personal allowance near the top.

Click on "Next". Select "Yes" Click on "Next" and complete the next screen to reduce the 2013/14 payments on account.
Customer: replied 2 years ago.

That's great, thank you.


 


One final question. Is there any way that this can be paid in instalments? Or does the entire amount have to be paid by the 31st January?

Expert:  TonyTax replied 2 years ago.
The tax due on 31 January 2014 is payable as a lump sum. However, if your partner calls the HMRC Business Payment Support Service, he may be able to negotiate a payment plan.
Customer: replied 2 years ago.

That's a great help - thank you. Sorry, just one last question. Will he be eligible for a rebate at all? He was he was out of work until October of this year?

Expert:  TonyTax replied 2 years ago.

He wont be eligible for a rebate for 2012/13 as he has yet to pay his tax for that year.

For 2013/14, assuming he has been on a 810L tax code since he started his new job, he would have been paying less tax than he otherwise might have as his personal allowances are playing catch up so hopfully he will be have paid the right amount up to now. You can check the position after 5 April 2014.

Customer: replied 2 years ago.

He has actually been on (and is still on) an emergency tax code. I guess he needs to talk to his employer / tax office?

Expert:  TonyTax replied 2 years ago.
He should call the tax office on the number here to have his tax coding reviewed and amended, if necessary. They will do that while he is on the phone. As soon as it is used by his employer, any tax overpaid will be repaid via his salary. He should make sure his employer gets a copy of the tax coding when he has received his own copy.
Customer: replied 2 years ago.

Thank you, you have been most helpful.


Caroline

Expert:  TonyTax replied 2 years ago.
Thanks and good luck.

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