Free tax advice available for those on a low income

tangojulie

"I did my self assessment online and discovered I need to pay £134. I used they link they provided to pay via https://www.billpayment.co.uk/hmrc/ - but two days later the payment's ended up back in my account."

There are a few possible reasons for this. One is that you may have confused amounts due with amounts payable. It's not obvious that these can be different so I'll try to explain.

If there are never any changes in your circumstances, and you always pay the right amount exactly on time, then the amount due should always match the amount payable. But if for any reason your tax liability changes (maybe you become entitled to more allowances, but could be several reasons) the amount that's due will change. If you have already paid something on the basis of the amount that was originally due, you will have under- or over-paid.
Next year, they'll be a different amount due. The amount payable for that year will be more or less than the amount due, depending on whether you have an underpayment or an overpayment to take into account. To get it right you have to track the amounts due and the amounts paid separately.

The second possible explanation is that the Inland Revenue software is showing the wrong figure due in the first place. I noticed this on my return - the total tax due was the right figure, but when it calculated the balancing payment to be made for the year it didn't take off both the payments on account already made. I rang the tax helpline and they said "you're right, this is something we already know about, but you'll have to ring the IT support helpline to get it changed". Which I did, only to be told that they didn't know anything about tax and didn't really understand the point.

I must admit to being very surprised that this didn't show up as a big issue - if it happens on everyone's return there will be millions of people overpaying and claiming repayments. However it doesn't always seem to happen. My OH has simpler tax affairs than I and his payment due was correctly calculated.

If you think it might have happened to you my suggestion is that you call the tax helpline, tell them what your total tax due for the year is, and ask them to clarify how much of it you should pay when. Don't call the IT helpdesk, they won't know.

tangojulie

cosyc wrote: »

Income is any thing recieved between 6 4 07 and 5 4 08.

Technically I think income is anything due to be received between these dates, whether you actually got it or not. For pensions it probably doesn't make much difference, but if you're in business and your customers keep you waiting months for payment, it does.

tangojulie

wilderflower wrote: »

Hi,

The penalty notice will only be payable if there is tax to pay!! If they owe you a rebate, then the penalty notice will not be charged.
quote]

Be careful - some penalties are not tax based and so they remain due even if there is no tax to pay. A penalty for making a late return depends on whether you made the return late. If you did then the penalty is due. The tax inspector might choose not to charge it, but that's a different matter.

Interest, on the other and, is tax based and should be a purely arithmetic calculation. If you hung on to cash that you should have paid over, they want some recompense for the fact that it was sitting in your bank account and not theirs.

Hmm, I seem to be aving a bit of a picky technical morning today - probably the result of spending the weekend grapping with my own return! But I ope it helps someone not to get caught out.

John_Pierpoint

I am sorting out the affairs of an old relative, who died last September.
http://forums.moneysavingexpert.com/...html?t=1164505
Not only do I have a dodgy will to explain to 8 remaining beneficiaries, I seem to have unearthed problems on the income tax front.
I have recently sent off the details of what I think was his sources of income for tax year 07/08.
Perhaps I don't understand how our complex tax system works but, on the other hand, perhaps HMRC have been overcharging him?
In round numbers he had:

28,000 in grossed up income (ie by adding back the tax deducted at source)

7,000 State pension (paid gross)
1,000 Company pension (tax deducted because of notice of coding............500 )
600 Charitable trust (tax deducted at 40%.............................................240 )
3,300 Term deposit by Lloyds-TSB, seemingly without deduction of tax!
1,000 Paid gross by NS&I Pensioner Guaranteed bonds.
1,200 Share dividends:1080 plus 120 of ACT at 10% (see below).
13,900 Various savings & "bonds" with tax deducted at 20%......................2780 )
=====.............................................................................................======
28,000 Gross total..............................................................................3520 tax deducted

Now this total is above the upper income limit for pensioners aged over 75.
so elderly relatives personal allowance is 7690 - 0.5 (28000 - 20900) = 3550 or
5225 taxed at 0.00% (the standard personal allowance)
2230 taxed at 10 % (lower rate)
the rest taxed at 20% (interest) or 22% "earnings" as higher rate is obviously not applicable.

Can I do the calculation like this:
7,000 State pension (paid gross) plus
1,000 Company pension........ less 5225 tax free = 2775 taxable
...................................................... ............. giving 2230 @ 10% = tax of 223.
.....................................................................leaving 545 @ 22% = tax of 120
600 Charitable trust (tax deducted at 40%=240 )
3,300 Term deposit by Lloyds-TSB, without deduction of tax!
1,000 Paid gross by NS&I Pensioner Guaranteed bonds.
............All liable to tax at 20% (?) means 4900 @ 20 % ...............= tax of 980....
.
1,200 Share dividends:1080 plus 120 of ACT at 10%.
............Ignore these, they are deemed to have paid standard rate(?).
13,900 Various savings & "bonds" with tax liability at 20%.. .....................2780....
.................................................................................................................
So ignoring the shares, there is a total liability to tax of ...............................4103
.............................................& tax already deducted at source is..'''..........3520
So theoretically HMRC should ask for another ................................. ...........583 ?
However they seem to have assessed and collected considerably more .

Perhaps I don't understand this complex system?

http://www.hmrc.gov.uk/rates/it.htm.

skipsey

I registered as Self Employed in April 2008 and earned my first cash in May 2008. Does that mean I don't have to pay anything yet?

Many thanks for any help.

madasahatter_2

I would like to register online to be able to check the status of my tax affairs. However I prefer to still complete my tax return on paper as always. I seem to remember reading somewhere (maybe on this site) that once registered online with I.R. they expect you to file online and don't send the tax return to you by post. Can someone let me know if this is the case?

vinylmusic

MSE_Wendy wrote: »

* If you miss the relevant deadline you'll be charged an automatic £100 penalty. *


Not applied yet - you'll need a PIN

To be able to submit an online claim you need to register on the HRMC website. Yet before you can fill in your return an activation code needs to be posted to you. This can take up to 7 days, which means you could now miss the 31 Jan deadline.

[threadbanner]box[/threadbanner]

I'm sure I am not alone to be missing the 31st Jan deadline
Last night having got all of my figures together and not knowing I needed 7 days to get a pin I became very worried. However its not bad news for everyone.
This morning I called the IR helpline to explain my problem I received the following advice:

If you miss the deadline the £100 fine is recorded on your account as owing
If however you are under the threshold and have no tax to pay once they receive your figures the £100 fine goes away.
It's important though to register for online self assessment before the 31st Jan deadline.

Phew! (sigh of relief):T

Stampede_2

tangojulie wrote: »

"I did my self assessment online and discovered I need to pay £134. I used they link they provided to pay via https://www.billpayment.co.uk/hmrc/ - but two days later the payment's ended up back in my account."

There are a few possible reasons for this. One is that you may have confused amounts due with amounts payable. It's not obvious that these can be different so I'll try to explain.

If there are never any changes in your circumstances, and you always pay the right amount exactly on time, then the amount due should always match the amount payable. But if for any reason your tax liability changes (maybe you become entitled to more allowances, but could be several reasons) the amount that's due will change. If you have already paid something on the basis of the amount that was originally due, you will have under- or over-paid.
Next year, they'll be a different amount due. The amount payable for that year will be more or less than the amount due, depending on whether you have an underpayment or an overpayment to take into account. To get it right you have to track the amounts due and the amounts paid separately.

The second possible explanation is that the Inland Revenue software is showing the wrong figure due in the first place. I noticed this on my return - the total tax due was the right figure, but when it calculated the balancing payment to be made for the year it didn't take off both the payments on account already made. I rang the tax helpline and they said "you're right, this is something we already know about, but you'll have to ring the IT support helpline to get it changed". Which I did, only to be told that they didn't know anything about tax and didn't really understand the point.

I must admit to being very surprised that this didn't show up as a big issue - if it happens on everyone's return there will be millions of people overpaying and claiming repayments. However it doesn't always seem to happen. My OH has simpler tax affairs than I and his payment due was correctly calculated.

If you think it might have happened to you my suggestion is that you call the tax helpline, tell them what your total tax due for the year is, and ask them to clarify how much of it you should pay when. Don't call the IT helpdesk, they won't know.

This happened to me ..only a few days ago. Had paid substantial advance sums last year, on account .. the on line process said I owed them a substantial amount by 31st Jan 09 .. when I asked accountant why seems the Revue hadn't deducted my advance payments and now I'm expecting a refund

:j debt free .. no mortgage .. only day to day bills

tigerlily

I have completed my tax return on line and know how much I need to pay..........I just dont have the cash at the min. Will I get a £100 fine if its not paid by the 31st. I should have the money by the end of Feb!

mellucia

Just to let you know as I work for the Inland Revenue, we had new guidance on 22nd Jan, there is a backlog on the activation pins getting out, you know have till the 10th Feb. What you need to do: You need to apply for a pin before the 31st Jan, and then file your return as soon as you can, after you get your pin, the revenue will accept there is a reasonable excuse for not filing on time, you will get a penalty notice in the middle of Feb, but you can write in and appeal on the above grounds!!
Also if you cant pay on time, if you phone your tax office and say it's causing Hardship to pay on time, please remember you have to use the word Hardship, and they will give you time to pay, with out interest or Penalties, we are not all bad at the Revenue we are there to help, it just takes a phone call.....

Mellucia