Self Assessment, Tax Code and Refund

CakeTen · 9 December 2012 at 10:11PM

Hi,

Basic situation; did my 2011/2012 self assessment online and it has calculated a tax refund of £62 and some pennies.

My situation was that I was in full time employment with a Tax Code of 712L and also self employed getting a very small income on the side, exempt from Class 2 Nics due to the low income on the Self employment.

This year my tax code is 775L.

Am I right in thinking that this tax code is responsible for the refund they have calculated?

Also, do I understand it correctly that with this tax code my full time employer would have paid tax on everything above £7120 (712L), so essentially paying more tax than if I was on the basic entry tax code. I'm just a little confused how I get a refund when I still made £40 out of the self employment.

Was the self employment the reason behind creating this tax code in the first place?

Would like to understand this as I'll be contacting HMRC this week to update them as I've stopped the self employment as you can imagine with the profit so low now, and my full time employment has changed etc..

Thanks for any help!
Cake.

pjclar02 · 9 December 2012 at 10:54PM

Hello there

You would have to track back through your PAYE coding notices to see why HMRC adjusted it. The standard code for 2011/12 was 747L - so it is possible they reduced this to take account of your self-employment income.

If they reduced your code to 712L and you only received £40 of self-employment income then too much tax was collected through PAYE on your employment income which is why you are now due a refund.

Hope this helps

jimmo · 9 December 2012 at 11:04PM

Your codes for 2011/12 and 2012/13 are the equivalent of £355 allowances less than normal.

355 @ 20% = £71.00

Take away tax on your s/e profit (40 @ 20% = £8.00) and you get a repayment of £63.

So your reasoning seems sound but you’ll have to ask HMRC why your code has been restricted.

CakeTen · 10 December 2012 at 12:05AM

Brill, thanks both!

I'll have a chat to hmrc then about the tax code.

Cheers.

CakeTen · 10 December 2012 at 1:32PM

Thanks again guys. Spoke to HMRC this morning to confirm the tax code situation, was exactly as you said, 'other income' was the reason for the code. The only other income I had was the self employment which was more on previous years, with the money from that falling to the £40 gave that gap in the tax code where my personal allowance was lower with the full time employment but the self employment didn't meet that expectation. Seems so much more straight forward now. HMRC have been updated as well.

Self Assessment, Tax Code and Refund

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