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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15711
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I received a tax bill for about 2000 pounds for last year which

Customer Question

I received a tax bill for about 2000 pounds for last year which I paid in January. In February, I got a bill saying I owed 1143 pounds for next year as well as a payment due in July for the same amount. I have never been asked to pay this much money before for the July payment and have never had a request for money at all besides the regular tax bill before the July payment. Is this correct?

Thank you very much
Juanita McGlashan
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
Hi.

Are you employed or self-employed. If neither, what sources of income do you have?
Customer: replied 2 years ago.

I am retired and I live on pensions

Expert:  TonyTax replied 2 years ago.
Thanks.

Leave this with me while I draft my answer.
Customer: replied 2 years ago.

OK Thank you very much

Expert:  TonyTax replied 2 years ago.
Hi again.

Payments on account for the next tax year are automatically calculated by the self-assessment system if you owe more than £1,000 for the previous year as you will read here.

If you don't think that the issue which caused you to be underpaid for the previous year will re-occur in the current tax year, you can call the tax office on the number here to have the payments on account reduced to a more appropriate level or to £0 if you think that at least 80% of the tax you need to pay for 2013/14 will be collected through your tax codings.

If you are receiving state pension, the tax on that will normally be collected by placing a restriction in the tax coding being operated against an occupational or private pension. You, therefore, need to check your tax codings as and when you receive them. It may be that your occupational or private pension is too small for the tax due on state pension to be collected through your tax coding and if that is the case, you will always owe some tax at the end of the tax year.

A new tax year starts on 6 April. You should call the tax office to have your tax codings reviewed while you are on the phone and to have any changes made that are necessary. You might also ask why you were underpaid by £2,000 for 2012/13 and if that is likely to be the case for 2013/14 based on the codings that have been in use for 2013/14.

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

Do you mean when you say owe more than a thousand pounds, unpaid tax for the previous year or expected income for the next year

Expert:  TonyTax replied 2 years ago.

I meant the previous year. You owed over £1,000 and that fact generated the payments on account for 2013/14.

 

If you had owed £800 for 2012/13, you would not be asked to make payments on account for 2013/14. In any event, if the problem which caused you to be underpaid for the earlier year, 2012/13, was nor present in 2013/14, you can have the payments on account reduced accordingly or to £0 if necessary. That's why I suggested you ask the tax office to tell you why you owed £2,000 for 2012/13 and if the reasons for that (incorrect tax codings for example) have been carried over into 2013/14.

Customer: replied 2 years ago.

To the best of my knowledge, I paid the entire tax bill for 2012-13 ( I do a self assessment report as most of my money comes from two American pensions).


I have tried repeatedly to ask (3 different people at HMRC) and I get basically the same answer that you gave me. It just seems that something is wrong. I have never in the past paid this much money up front (it is more than my entire tax bill) Something does not seem quite right

Expert:  TonyTax replied 2 years ago.
Do you pay any US tax on the US pensions? You should only pay UK tax on 90% of the pensions as they are foreign pensions. As they are US pensions, I doubt that any UK tax is deducted at source. Can you tell me how much you receive in pension income before tax annually, splitting the total between the individual pensions.

Can you also tell me what your income was for the 2012/13 tax year and your date of birth? Are you a UK national or a US national or a national of another country? How long have you lived in the UK?
Customer: replied 2 years ago.

I am an American citizen and have lived in Britain for 15 years. My two American pensions add up to about 48,000 dollars, the exchange rate


determines how many pounds that translates into. I also have a 3000pound per year Britis pension.


I am 75 years old


 


My American social security pension is for about 18,000 dollars and my Arizona State retirement is approximately 30,000 dollars.

Expert:  TonyTax replied 2 years ago.

Thanks.

 

Are either of the US pensions a result of working for the US government in what is called "government service" employment such as the miltary or the US equivalent of the civil service? Are these pensions taxed in the UK or the US or both?

Customer: replied 2 years ago.

Neither of the pensions were the result of working for the government.


 


I have been paying tax in both countries for the last 15 years. I only discovered quite recently that I am not required to pay American taxes,


( Thank you to the account who has been doing my American taxes all those years) I am considering suing him for incompetence.


However, I think I have figuered out what has been going on.


Thank you for your help.

Expert:  TonyTax replied 2 years ago.
Do you want me to continue or are you OK to deal with it yourself? I'd be happy to comment further on anything the tax office say to you when you call them. I also think that your income hovers around the level at which you start to lose age allowance, though that should be less of a problem in future as the government is moving to merge the personal allowances regardless of age.
Customer: replied 2 years ago.

I think I can handle the situation.


 


Thank you for your excellent help


 


juanita McGlashan

Expert:  TonyTax replied 2 years ago.
That's good. Thanks.

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