Incorrect Self Assessment Filed

nmd001

Hi All,

I submitted my paper self assessment and have completed it incorrectly, it now transpires that I owe HMRC further income tax which they have calculated.

HMRC Calculation as follows:

Pay from employment £11,440
Interest from UK Bank £30,990
Total Income Received £42,430

Minus Personal Allowance £5,225
Total Income on which tax is due £37,205

Tax Calc =

Pay

£2,230 @ 10% = £223.00 plus
£3,985 @ 22% = £876.70

Interest from UK Bank
£0 @ 10% = £0 plus
£28,385 @ 20% = £5,677.00 plus
£2,605 @ 40% = £1,042.00

Income Tax Charged = £7,818.70

Minus Tax Deducted
Employment £1,096.00
Interest from UK Bank £6,198.00
Total Tax Deducted £7,294.00

The reason the above calculation is incorrect is that I stated in box 3 of page TR3 a value of £24,792 which is the dividend i received from my limited company. I should have inserted this figure in box 3 of page E1 of my tax return.

My question is if i move the figure noted in the paragraph above what effect will this have on my tax amount due.

ceeforcat

Are you sure that you put this figure in box 3 as it would appear that HMRC have treated it as UK interest (as if entered on box 2 or box1) on page TR3? This would mean that the income tax calculation is substantially incorrect.

It should go in box 3 on page TR3 - absolutely definitely not page E1 ( dividends are not employed earnings)

It also appears that you do receive UK bank interest - can you provide details of:

a) total dividends received
b)total bank interest received

nmd001

ceeforcat,

thanks for the quick reply,

yes, definitely £24792 in box 3 of page TR3.

I am the sole employee of my company owned by myself and my wife 60/40 split. I pay myself minimum wage and the rest of the money earned by the company is paid as dividend. Completed tax return is as follows:

Page TR2
Box 1 - X for yes
Remaining boxes all blank.

Page E1
Box 1 - £11440
Box 2 - £1096
Box 3 - £ZERO
Box 4 & 5 - Completes
Box 6 - X for yes
Box 7 - X for yes
Box 9 to 20 - left blank

Page E2
Box 1 to 20 - left blank

Page TR3
Box 1 & 2 - left blank
Box 3 - £24792
Box 6 to 19 - left blank

Page TR4
Box 1 to 15 - left blank

End of tax return.

ceeforcat

Ah - that's where HMRC have messed up - they have grossed up 24792 to get 30990. £30990 less 20% is £24792 - that's if it was savings income.

As it isn't and you have done everything correctly Phone HMRC and explain their error. You are also now not a HR taxpayer and should owe precisely nothing.

nmd001

Thanks for the help, much appreciated.

I phoned the tax office and it would appear the amount was miscalculated and (as you suspected) assessed as interest from bank savings. They are going to recalculate and send a revised assessment out.

Thanks for your help.

Neil

ps. wouldn't it be wonderful to get interest of £24k per year, just checked with my bank - would require a bank balance from £870k at best rate to £1.46m.