Self Assessment - Tax Owing

booksurr wrote: »

(31,785 x 20%) + ((134,000 - 31,785) x 40%) = 47,243

time for you to pay for some tax advice

That should be £31,865 for 2014/15 and not £31,785 so tax would be £47,227.

village_life wrote: »

My current tax code on the P60 was 1033.

Hence your underpayment. You have had £10,330 of a personal allowance that £10k (at least) of you shouldn't get.

Your personal allowance is £330 higher than normal - why is that?

This "rule" about >£100k earnings isnt really common knowledge IMHO, so I expected PAYE would cater for all payments having increased my income....

No - it's up to you to inform HMRC that you expect to have income over £120k so that they can adjust your tax code to take the correct PAYE.

I would suggest you contact HMRC although I expect they will now adjust your tax code in light of the tax return.

village_life wrote: »

I don't understand why when operating under PAYE its my obligation to tell the tax office my Pay is going to increase.... i thought that was the point of PAYE.....

When it crosses over £100k, yes it's better that you inform them as PAYE can't handle that situation.

would the same obligation hold if I got a payrise from £40k to £60k?

No it wouldn't. The problem lies with the reducing of the PA on incomes over £100k.

I dont think the population generally communicate with HMRC in such a "proactive" manner - hence my bemusement

I'm afraid all taxpayers really should be looking at their tax more proactively. Would you happily allow your employer just to take what he likes from your pay without trying to understand it? Or anything that deducts money from you?

So I'm left with a demand to pay £4k by January which I cannot afford (Despite earnings) so how do I approach this with HMRC and how do I avoid falling into this situation again - particularly when my core earning is somewhat variable comprising £80k base salary and notionally a 50% bonus (Thus getting to OTE £120k)

You need to communicate with HMRC and find out how to repay it. You also need to inform them if your salary will go over £100k. You could also pay more into your pension to avoid losing the PA.

village_life wrote: »

I will give HMRC a call. TBH I am a bit surprised that I may have to find ways to positively mitigate my tax....

You don't have to mitigate tax if you don't want to.

I already pay 5% (matched) into a pension provided by my employer and am broadly OK with what that means for me.... having to have a private pension purposefully to avoid tax in the future I am less comfortable with....

You don't necessarily have to have a private pension - your employer might allow extra contributions.

However, personally, I would rather the money is in my pension pot for my future rather than in the hands of the taxman. If your pension income is that great you may end up paying it in tax later on.

Pension saving and tax relief is a very legitimate way of saving tax and used by many people. I'm not sure I understand your reluctance to use it.

while my salary will vary YoY (by virtue of being bonus scheme) I am fine paying the tax as long as its taken correctly and not leaving me with a £4k bill and a problem I then need to resolve...... it just feels like a disincentive to perform/improve one's situation......

But thanks again

It will be taken correctly providing you are a bit more proactive about your tax affairs.

As to the extra £330 allowance you get on your tax code, you should have received a P2 Coding Notice from HMRC which would have explained exactly what it was for. What did this say?