Me & HMRC

stoneystretton

I would be very grateful for help. I will try to talk tax language in order to get that help and not right brained clueless about tax language.
Here goes.
I was on tax code 373l in 07/08 that is to repay £682 in underpaid tax from last year. :-(
However in the 373l coding notice HMRC included a £1500 expenses allowance that I claimed from the previous year as my expenses are pretty much constant. Therefore making my tax code 5225 plus 1500 minus whatever to claim back 682 = 373l.

Now then I am completing 07/08 tax spreadsheet. It doesn
It is similar to taxcalc.

Therefore it has started with my gross income, minus expenses (this year £2493) and personal allowance of 5225. It has then taxed me on the remainder. It shows I have overpaid by £682 (the amount I owed)
Is this the correct way of doing it? It also shows that I have paid some 40% tax, but my payslips don't show this!
I am just confused because of tax code of 373l in coding notice.
Should I just rely on the tax spreadsheet and ignore 373l code which seem to confuse it?!

stratty

within the calculation you should include an entry for the old style box 18.1

that is tax due for an earlier year collected this year

your calc should then balance out

jem16

As your tax code is 373L your personal allowance isn't £5225 but £3730 as you have lost some of your allowance due to the tax that you owe.

stoneystretton

thank you both
unfortunately my spreadsheet is quite basic and doesn't have a box 18.1 or similar
so, if I alter the spreadsheet to put in personal allowance 3730 and take out £1500 expenses will that be correct (as £1500 expenses included in code)?

jem16

Either that or make a new cell for tax owed.

stoneystretton

hi
after a quick call to friendly accountant... the word is.... ignore coding notice of personal allowance 373 - that is just for employer to deduct correct tax including underpayment.
So when filling in spread sheet I use taxable income minus allowable expenses minus 5225 (usual allowance). I then end up with tax due plus tax paid. Which in my case shows surplus of £682 to pay back what I owed.
What confused me was the coding notice, which is ignored when calculating year end as full tax allowance is given.
Does that make sense?! lol

ctm_2

Yeah, ignore your notice of coding when calculating your tax.

Your calculation should be as follows:

Total pay £xxxxx
Less personal allowance £5225
Less allowable expenses £2493
Equals Taxable income of £xxxxx

The split that between the bands
£2230 @ 10% = £223.00 A
£32370 (or the remainder of taxable income if lower) @ 22% = £ B
£xxxx @ 40% (if appropriate) = £ C

A+B+C = D (tax due for the year)

then add on the amount from a previous year to be collected this year, giving total due for the year of D + whatever the previous underpayment was.

Then compare that to the tax you have paid.

stoneystretton

Oh bless you- someone who speaks my language!:kisses3:
That's exactly what I have done apart from adding on tax I owed from previous year (£682). The spreadsheet only allows tax paid (entered from my P60s and then calculates what I should have paid.
the calculation shows I have overpaid tax to that amount, which of course I haven't as it is pretty much what I owed them!
Tax coding is beyond me. Why on earth did HMRC include an allowance for expenses based on previous years claim, when in fact it makes no difference when it comes to year end? I think they took a guess at my anticipated earnings in 07/08 as well as claiming back the £682 and it just about evened out by accident as my expenses are 1k more than previous year.

Shall I now shut up? I am definitely pushing the limits of my levels of understanding of HMRC matters.

I have phoned the 'helpline' but they have no idea what I am talking about as they are far too left brained for their own good. Or I am too dull to make myself understood? lol