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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15915
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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If I earn over 100k do I need to pay back part of my personal

Resolved Question:

If I earn over 100k do I need to pay back part of my personal allowenece as part of the self assessment Process?
Submitted: 1 year ago.
Category: Tax
Customer: replied 1 year ago.
(Posted by JustAnswer at customer's request) Hello. I would like to request the following Expert Service(s) from you: Live Phone Call. Let me know if you need more information, or send me the service offer(s) so we can proceed.
Expert:  TonyTax replied 1 year ago.
Hi. You lose £1 of the personal allowance for every £2 of income you have over £100,000 in any one tax year. Take a look here for an explanation of what "adjusted net income" is for the purposes of determining your entitlement to personal allowances. If you have had the personal allowance all through the tax year and your adjusted net income was over £100,000, then you will pay back the excess via a self-assessment tax return or if you aren't in self-assessment already, HMRC may put you into SA or collect the tax vis a P800 tax calculation. Some taxpayers choose to have the personal allowance reduced or taxken away altogether as they anticipate in advance of the new tax year that their adjusted net income will exceed £100,000. HMRC may also change the tax code for the coming tax year based on the previous tax year without notice. I hope this helps but let me know if you have any further questions.
Expert:  TonyTax replied 1 year ago.
I can make a phone call but it will involve an additional fee. Let me know if you would like a phone call. My typed answer should suffice to be honest.
Customer: replied 1 year ago.
I think I understand. I earned over 100k in 2014 to 15, and, although I paid PAYE tax on all of that l,as part of the self assessment process I now need to pay back a portion of the personal allowenece plus any child benefit claimed (and it seems I have a new tax code for 2015-16.
Expert:  TonyTax replied 1 year ago.
If you earn over £60,000 in a tax year, you will pay back all the child benefit for that tax year. HMRC may have changed your 2015/16 tax code in light of the 2014/15 situation but you will probably still be underpaid for that year too.
Customer: replied 1 year ago.
Thanks, ***** ***** I distracted you with the child benefit question. The bigger tax bill seems to be around paying back a portion of the personal allowence, I was surprised at this and just wanted to check that it was normal for this to be recovered by HMRC through self assessment.
Expert:  TonyTax replied 1 year ago.
No problem. If you submit your tax return by 30 December following the end of the tax year and the underpayment is less than £3,000, it can be collected through a tax coding restriction over 12 months from the next but one tax year. HMRC may consider coding a larger underpayment if you ask them after having submitted the tax return by 30 December following the end of the tax year. THey did intend to introduce such a system permanently but it didn't happen.
Customer: replied 1 year ago.
Thanks very much for your advice. Am guessing I need to pay up!
Expert:  TonyTax replied 1 year ago.
That would be nice! Final bit of advice. Always check your tax code.
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