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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15940
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I am a director and am paid PAYE. I have no other investments

Resolved Question:

I am a director and am paid PAYE. I have no other investments and income.
My Tax return is straight forward - only salary to include a car allowance.
I have just completed my 2014-15 return and have completely unexpectedly been hit with a bill over £2000 to be paid by the end of the month. I am at a loss as I am PAYE - will be taking up with my accounts department. The issue is I don't have £2000 available to pay this week - can do something - any advice?
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi. Can you give me your gross pay and tax figures for 2014/15 please. If you have your P60 to hand, what was the final tax code?
Customer: replied 1 year ago.
Pay 112200; Tax 34555.00 ; Final Tax code on P60 987L
Expert:  TonyTax replied 1 year ago.
Thanks.
Leave this with me while I draft my answer.
Customer: replied 1 year ago.
Ok thanks
Expert:  TonyTax replied 1 year ago.
As you earned over £100,000 in 2014/15, you have lost £6,100 of your personal allowance of £10,000 (£1 for very £2 of income over £100,000) but you had a tax code of 987L (£9,870 of personal allowance). Tax on £6,100 at 40% is £2,440. Take a look here for information on adjusted net income:
https://www.gov.uk/guidance/adjusted-net-income
Frankly, your payroll people should know about the loss of the personal allowance but, ultimately, every taxpayer is responsible for their own tax affairs.
You say you are underpaid by £2,000 so there may be other factors which feed into the overall liability.
Call the Business Payment Support Service to arrange a payment plan. They won't do that until they see the liability which means you will need to submit the tax return.
https://www.gov.uk/government/organisations/hm-revenue-customs/contact/business-payment-support-service
You should review your current tax code in light of what I've told you here.
I hope this helps but let me know if you have any further questions.
Customer: replied 1 year ago.
Thanks for this and the advice. Yes will check my Tax code 2015/16 - 460T
One question would it be more tax efficient to drop the salary below £100k or is there no real difference.
Expert:  TonyTax replied 1 year ago.
You can pay pension contributions or make gift aid donations to get your "adjusted net income " for the purposes of the personal allowance to £100,000 or below. It would be worth it as the effective rate of tax on the loss of a personal allowance is 60%.
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