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    • ludmilla
    • By ludmilla 13th Oct 16, 10:06 AM
    • 33Posts
    • 2Thanks
    ludmilla
    Tax question for over 65
    • #1
    • 13th Oct 16, 10:06 AM
    Tax question for over 65 13th Oct 16 at 10:06 AM
    Good Morning

    I am looking after my mothers tax, well I have given it to a an accountant to do, and it has been sent back with what my mother owes. I just wondered if these figures are normal. It appears that my 86 year old mother has to pay this years tax (normal) but also next years too! this will take away all money put aside and as she herself says, I will probably be dead next year.

    £
    tot income 21,553
    age related allowance 10,893
    tax borne 2,178.60
    total liability 2,178.60
    payments due 2015-16 2,178.60
    1st payment on account for 2016-2017 1,089.30
    total payment by 31 jan 17 3,267.90
    2nd payment 16-17 due 31 july 17 1,089.30

    just wondered if this all makes sense to some one more qualified that me.

    Many thanks

    Ludmilla
Page 1
    • DesG
    • By DesG 13th Oct 16, 10:16 AM
    • 1,219 Posts
    • 425 Thanks
    DesG
    • #2
    • 13th Oct 16, 10:16 AM
    • #2
    • 13th Oct 16, 10:16 AM
    What is the source of all this untaxed income?
    • ludmilla
    • By ludmilla 13th Oct 16, 10:19 AM
    • 33 Posts
    • 2 Thanks
    ludmilla
    • #3
    • 13th Oct 16, 10:19 AM
    • #3
    • 13th Oct 16, 10:19 AM
    land & property 12,667
    foreign income 2,673
    UK Pension 6,213
    • dunstonh
    • By dunstonh 13th Oct 16, 10:20 AM
    • 85,111 Posts
    • 50,130 Thanks
    dunstonh
    • #4
    • 13th Oct 16, 10:20 AM
    • #4
    • 13th Oct 16, 10:20 AM
    What does the accountant say when you ask them this question?
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • Linton
    • By Linton 13th Oct 16, 10:31 AM
    • 6,944 Posts
    • 6,538 Thanks
    Linton
    • #5
    • 13th Oct 16, 10:31 AM
    • #5
    • 13th Oct 16, 10:31 AM
    I dont think she is being asked to pay future tax now....

    She owes 2178.60 tax for 2015-2016 which she is being asked to pay by 31st Jan 2017. Also she is being asked to pay half of 2016-2017 tax by 31st Jan 2017 which is more than halfway through 2016-2017.

    So unless she doesnt get her foreign and property income until the end of the 2016-2017 tax year this doesnt seem unreasonable. It is after all rather more generous than if all her income was taxed at source.
    • ludmilla
    • By ludmilla 13th Oct 16, 10:44 AM
    • 33 Posts
    • 2 Thanks
    ludmilla
    • #6
    • 13th Oct 16, 10:44 AM
    • #6
    • 13th Oct 16, 10:44 AM
    So when I queried the figures she replied:

    The two figures added together that you've mentioned below, add to the £3,267.90. The figure of £2,178.60 is the tax due on the net profit of 2015-16 income, so that full amount is payable. The second figure of £1,089.30 is the first 50% installment of 2016-17 tax which is payable in advance in two installments, January and July. So that is also due.

    With the second installment of £1,089.30 of 2016-17 tax falling payable on 31sy July.

    so I say: so effectively her tax is 2,178.60 but in addition she is paying half of next years tax now?

    then she replies: correct

    to which I say: seems a bit harsh when you are 86 and need every penny!

    she replies: well we can put in an application to reduce the payment on account, if for any reason that you're aware of, the amount of net profit on this current year is lower. Any reason why that would be such as the rental property empty for a period of time?

    I said: There is no way of knowing if flat will be empty or un-rented - although with Brexit our German tenant might well leave. A tenant leaving always means an expense of - repainting at least.

    I am more or less innumerate so very grateful for your help.
    • Chickereeeee
    • By Chickereeeee 13th Oct 16, 10:46 AM
    • 377 Posts
    • 228 Thanks
    Chickereeeee
    • #7
    • 13th Oct 16, 10:46 AM
    • #7
    • 13th Oct 16, 10:46 AM
    But 2016-7 is THIS year? So tax paid in January 2017 would be for April-September 2016, and that in July 2017 for October 2016-March 2017.

    I do not know why it would have changed, if it has.

    C
    Last edited by Chickereeeee; 13-10-2016 at 10:49 AM.
    • Chickereeeee
    • By Chickereeeee 13th Oct 16, 10:51 AM
    • 377 Posts
    • 228 Thanks
    Chickereeeee
    • #8
    • 13th Oct 16, 10:51 AM
    • #8
    • 13th Oct 16, 10:51 AM

    so I say: so effectively her tax is 2,178.60 but in addition she is paying half of next years tax now?

    then she replies: correct
    Originally posted by ludmilla
    INcorrect. You are paying LAST years tax now, and WILL be paying half of THIS years tax in January.
    • Linton
    • By Linton 13th Oct 16, 10:54 AM
    • 6,944 Posts
    • 6,538 Thanks
    Linton
    • #9
    • 13th Oct 16, 10:54 AM
    • #9
    • 13th Oct 16, 10:54 AM
    ...

    so I say: so effectively her tax is 2,178.60 but in addition she is paying half of next years tax now?

    then she replies: correct
    .....
    Originally posted by ludmilla
    The accountant isnt correct - your mother is being asked to pay half of the 2016-2017 tax more than halfway through the 2016-2017 year, not now. A sensible thing to do could be to put aside each month 1/12th of her annual tax bill into a separate account. She would then always have the money available to pay the tax when due.
    • sheramber
    • By sheramber 13th Oct 16, 1:56 PM
    • 2,731 Posts
    • 2,115 Thanks
    sheramber
    HMRC work on the basis that the income for 2016 will be at least the same as for 2015 /16

    1 st payment on account for 2016/17 is for half the tax payable on that income and is due to be paid by 31 st January 2017.

    The second payment on account for the same amount is payable by 31st July 2017.

    If your mother was taxed under PAYE ( as wages are ) the tax would be deducted from each payment as it was made and by 31 st JANUARY she would have paid all the tax due up to 31 st January, a total of 10 months tax , compared to the six months tax she is due to pay on 31st January 2017.

    She would pay the remaining two months tax by 31 st March , rather than half she is being asked to pay by 31 July 2017.
    She is paying her tax later that if she was paying under PAYE. So, she has had the benefit of the income for longer.

    When her 2o16/17 tax return is processed that actual amount due for 2016/17 will be calculated and if the tax due for the year is less than the payments on account will be adjusted accordingly.

    If the tax due is more than that paid by the payments on account then the additional amount will be due to be paid by 31 January 2018. along with the 1 st payment on account for 2017/18 , which will be half the amount of tax due 2016/17 , with the other half being payable by 31 July 2018.

    So, getting the tax return submitted as soon as possible after 6 April will show the exact position for the year and what will be payable. You do not need to wait until later to submit the return.

    Perhaps your mother's tax payable has previously been under £1000 due for the year. In that case she would not have been required to make payments on account. Because her tax bill for 2015/16 was over £1000 she is now required to make these payments on account for 2016/17 and following years that her tax due is more than £1000.
    • Clifford_Pope
    • By Clifford_Pope 13th Oct 16, 5:18 PM
    • 2,958 Posts
    • 2,886 Thanks
    Clifford_Pope
    I pay tax on trust income, and it works in exactly the same way. Unless you can provide a better estimate to mitigate the assessment, HMRC assume half the income will accrue by half way through the year, and you pay tax accordingly.
    • ludmilla
    • By ludmilla 13th Oct 16, 6:14 PM
    • 33 Posts
    • 2 Thanks
    ludmilla
    Thank you all so much, i actually understand it now. Sheramber you are right, she did pay less previously.
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