Help!! I'm Going Mad - Previous SA submission

Wirenth

Hi, I hope someone with good tax experience can help me figure out what is going on here.

Mum asked me to look over last years payslips this weekend as she thought she had paid rather a lot of tax.

Cue VERY unpleasant surprise - she's done enough overtime to make her a higher rate taxpayer. And I now have to do a Self-Assessment form for her...which opened up a can of worms :eek: :eek: because I decided to check the pension relief bit for a previous tax return of 2002-3.

I had to fill out tax returns for my mother for 2002-3 and 2003-4 tax years because her employer did not take the tax due on a taxable benefit (company private medical cover) out of her paypacket via PAYE. VERY STRESSFUL!!! :eek:

So, I filled the forms in online. 2002-3 tax year she was a higher rate taxpayer - £34627 from employer (this includes the medical cover)

Tax Calculations
Gross income minus personal allowance:
£34627 - £4615 = £30012 taxable income

10% band: (0 to 1920) = £192
22% band: (1920 to 29900) 28092 = £6180.24
40% band: (above 29900) = £112

£307 gross bank interest, tax on which is: £61.4

This means total tax owed (Employment and Bank Interest) = 6545.64

Total tax deducted at source (employer and bank) = 6362.74
So she underpaid tax by (6545.64 - 6362.74) = £182.9.

She also pays into a private pension (12*152.05 = £1824.60 a year) pension company automatically claims the basic rate relief and puts it into her pension as (£194.94*12 = 2339.28). So I clicked on 'please claim relief' for this, because the pension company doesn't do it.

This adds up nicely as £112 was all that was in the 40% tax band (and thus all that could be used for the relief on pension contributions) and she underpaid by 182.9. Basically, she ended up owing IR £70.90, which we paid.

HOWEVER:
The 2002-3 return shows tax relief asked for on £6287.79 in box 14.9. (This is the pensions box). On later pages, the online calculation shows the sentence: 'Your basic rate limit has been increased by 6288.00 to a total of 36188 for 2002/2003. This reduces the amount of income charged to higher rates of tax.'

What????? :eek:

I can't imagine I've been so bloody stupid as to put an amount in the pensions box that is 3* the amount that she contributed into the private pension!!! I'm so careful, I could be accused of being @n@lly retentive.

But the amount of tax that she has paid nevertheless seems to be correct. Can anyone explain this before I start on her 2004-5 SA return? I think I'm going barmy.

ctm_2

The only explanations are that
a) You got it wrong and put an incorrect amount there
b) HMRC captured the return incorrectly (although you indicate that it was filed online)
c) A combination of both of the above

You need to get HMRC to confirm the amount showing in the box on their computer system and then ask for it to be changed if it is incorrect.

however, if the amount charged at 40% was only £112, then increasing the basic rate band by anything more than that will not change anything. The calculation in this case will still be the same if you put £100000 in 14.9, so it's not really much to worry about, as long as the pension contributions were greater that the amount of income that was charged at 40%