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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'm completing my tax 14/15 return but the numbers aren't stacking up (self asse

Customer Question

I'm completing my tax 14/15 return but the numbers aren't stacking up (self assessment online reckons a 4k underpayment). I had one source of income and was PAYE. Taxable income was made up of:
- Regular salary
- Bonus
- Share scheme
plus, I received an ex-gratia payment (redundancy), statutory redundancy, payment in lieu of notice.
But as I was PAYE, I believe all taxable incomes were teated accordingly. I have payslips for year, plus 'statement on earnings' from employer and P11D.
Advice on how to proceed, or a check of the numbers would be appreciated!
Submitted: 10 months ago.
Category: Tax
Expert:  TonyTax replied 10 months ago.
Hi. To start with can you give me all the figures please. I may need more information after that.
Customer: replied 10 months ago.
Thanks Tony, here are the basic numbers from statement of earnings:Total taxable pay: 122,033.58
Total tax paid: 38,880.60From P11D: 1,398 (private medical)I've attached the statement of earnings plus the final payslip (March) which included the ex-gratia, statutory redundancy, payment in lieu of notice, bonus etc.The only thing I'm not sure about is that if you add up the numbers on page 1 of the statement of earnings, its about 8500 less than the total given in 'total taxable income'. Someone in the payroll team of my ex-employer said this was something to do with 'notional items' relating to tax on the share scheme. They lost me at that point!Thanks,
Tim
Expert:  TonyTax replied 10 months ago.
I need a password ***** the zip file.
Expert:  TonyTax replied 10 months ago.
Can you look at all your payslips for 2014/15 and tell me if the tax code was ever different from 0T Month1. Was it ever 1000L in the 2014/15 tax year?
Customer: replied 10 months ago.
sorry, here's the pdf file unzipped.
Customer: replied 10 months ago.
I believe my tax code was 851L
Expert:  TonyTax replied 10 months ago.
Thanks. There is a small difference between the taxable gross in the statement of earnings and the March 2015 payslip, £122,033.58 as opposed to £121,274.96. The same applies to tax paid, £38,880.60 as opposed to £38,729.00. The statement of earnings mentions a tax code of 0T Month 1 whereas the March 2015 payslip uses a tax code of 851L. This is where I think the underpayment comes from. As you earned over £120,000 in 2014/15, you lose your £10,000 personal allowance. That costs you £4,000 in tax at 40% but if the 851L code was used for your final payslip and it wasn't a Month 1 code, you will have paid around £3,404 too little tax (£8,510 x 40%). The tax on the medical benefit is £559.20 (£1,398 @ 40%) but that may be why you had a 851L code as opposed to a 1000L code in which case you would ignore the £559.20. That gives you an underpayment of about between £3,404 and £3,963. There may have been something else in your tax code which reduced your allowances. You should check with HMRC what gross and tax has been reported for you by your former employer and use those figures in your tax return, given the differences in the two forms you have sent to me. You might ask them what made up your tax code of 851L. I hope this helps but let em know if you have any further questions.
Customer: replied 10 months ago.
OK, thanks Tony. I was unaware of the loss of personal allowance over 100k. I guess because the income that pushed me over the threshold came on my last payslip then my employer would have applied my usual tax code for that income. In your experience, how flexible will HMRC be regarding payment, or timing thereof? Any advice for that?Thanks,
Tim
Expert:  TonyTax replied 10 months ago.
You lose £1 of the personal allowance for every £2 of income over £100,000. Take a look here for more information on that. The tax is payable by 31 January 2016. If you need time, call the Business Payment Support Service to try to negotiate terms. You need to wait a couple of days after you have submitted the tax return to allow the tax liability to feed through to the HMRC site so that the BPSS can see it.
Customer: replied 10 months ago.
Very helpful answers, thank you Tony.
Expert:  TonyTax replied 10 months ago.
Thanks.

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