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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4723
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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Hi completing my first self assessment, been PAYE all my life

Customer Question

Hi completing my first self assessment, been PAYE all my life with one firm, filling in the details online indicates I owe the IR £3600? How can this be correct? Can this amount be reduced/eliminated?
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.
Hello and welcome to the site. Thank you for your question.

Please provide me with the information you are inputting and I will do some calculations at my end to validate it.

Is all income from P60 details?
Are you in receipt of any benefits in kind?

Many thanks
Customer: replied 2 years ago.


From P60 to 5/4/2013:


 


Pay:118053.22


Tax deducted: 38111.20


 


Final tax code:558L


 


thanks


 


Steve

Expert:  taxadvisor.uk replied 2 years ago.
Steve, thank you for reply and information provided.

Your earnings in the tax year were above £100,000.

The Personal Allowance reduces where the income is above £100,000 - by £1 for every £2 of income above the £100,000 limit. This reduction applies irrespective of age or date of birth.

You were given a tax allowance of £5,580 in your tax coding. This would have been done not knowing that your income may exceed £100k.

As your earning were above (100,000+8,105*2) = £116,210 you would lose all personal allowance.

In light of this, your tax bill for 2012-13 is
First £34,370at 20% 6,874.00
Next 86,683 at 40% 33,473.20
Total 40,347.20
Tax deducted £38,111.20
Balance due 2012-13 £2,236.00

In addition, you will make a ist instalment payment of £1,118 towards your tax bill for 2013-14.

If you are not making contributions into a pension scheme, you should consider it as you would get tax relief on your contributions at your marginal rate of tax.

I hope this is helpful and answers your question.


If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 2 years ago.


Thanks.


 


Is the 1st instalment to this year avoidable as breaching the £100k level is dependant on whether I get a bonus or not?(paid around July so wont know if I reiceve one or the value if I do receive until then)


 


Also is there a payment plan that I can work out with IR? If yes is it also available next year if I take that option for 12/13 & find myself in the same position post bonus payment 13/14?(ie. you only get the option once)


 


Part of my periodic pay is £444.76 cash for car (replaced company car scheme) is there any reduction option on that fact?

Expert:  taxadvisor.uk replied 2 years ago.

Steve, thank you for your reply.

When completing your tax return you can elect to reduce your payments for 2013-14 to nil
or submit a form SA303 - Claim to reduce payments on account. You can download the form here

http://www.hmrc.gov.uk/sa/forms/sa303.pdf

You can certainly agree a payment plan with HMRC. You should be aware of interest and penalties payable if you don’t pay your tax on time

More information on this can be found here

http://www.hmrc.gov.uk/sa/deadlines-penalties.htm#6

The link to HMRC for payment support service is here

http://www.hmrc.gov.uk/payinghmrc/problems/bpps.htm

Periodic payment for car is deemed remuneration and chargeable to income tax at marginal rates.

I hope this is helpful and answers your question.

Customer: replied 2 years ago.

When completing your tax return you can elect to reduce your payments for 2013-14 to nil
or submit a form SA303 - Claim to reduce payments on account


 


I'm online on my assessment now & I don't see this facility - please advise where this is & do I insert teh £1118 figure you previously outlined as a 1 st contribution to 13/14?


 


Periodic payment for car is deemed remuneration and chargeable to income tax at marginal rates.


 


Does marginal rate indicate a reduced tax rate not applied to my circumstances outlined - of yes how is this achied?


 


thanks

Expert:  taxadvisor.uk replied 2 years ago.

Steve, thank you for your reply...please accept my apologies for delay in responding. I was with a client.

Please refer to notes on Page TCSN 23 covering Claim to reduce payments on account here

http://www.hmrc.gov.uk/worksheets/sa110-notes.pdf

If your remuneration including bonus and car allowance puts you into 40% tax rate band then there is nothing you can do to reduce it other than to forgo the allowance.

I hope this is helpful and answers your question.

Customer: replied 2 years ago.


need to find out re payment plan options & cant get through so may have a query after that....?


 

Expert:  taxadvisor.uk replied 2 years ago.
Steve, thank you for your update.

You should file your tax return irrespective and try to clear the tax for 2012-13 before end Feb 2014 to avoid penalty for late payment.


Good luck.

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