Self employed tax maths confusion!

ellissa

Thank you all for your comments.

I have double and triple checked the paperwork and the figures AND dates in my OP are 100% correct. I've got it in front of me in writing. It makes no sense to me either.

Do the following things help clear it up?
07/08 was the first tax yr of self employment and therefore the first self assessment completed.

The first calculation in OP for 07/08 was given in Jan 09 after filing the 07/08 assessment.

The second calcuation in OP for 08/09 was given this month after filing the 08/09 assessment.

I absolutely promise you the figures in OP are exactly what I have on paper from Inland Rev. There are no typos in my post - tho I did doubt myself!

I will, as advised, encourage my OH to call them first thing Tuesday.

Thanks
Ells

sloughflint

Will there be prizes going for this?

I definitely could believe that the liabilities are:
07/08: £876.18
08/09: £446.05

I agree with the amount requested for Jan 09 : all of 07/08 plus first half of 08/09 ( based on estimate)

I could understand that the amount for Jul 09 is zero due to a big drop.

I do not understand the figure for Jan 10 though. I just can't see why it should be £446.05.

You have already paid towards this amount and only have £7.96 left to go.
I would expect a first payment for 09/10 on top but that would be half of £446.05 until the proper calculation is performed.

ellissa wrote: »

Total income tax due: 876.18
07/08 balancing payment due by 31/1/09: 876.18
1st payment on account for 07/08 due 31/1/09: 438.09 I expected that to be 08/09
2nd payment on acc due 31/7/09: 438.09
Total due by 31/1/09: 1314.27

In the bit where you have the full breadown of the calculations, what was the bottom line? £876.18 due?

ellissa

I'm not sure about prizes but maybe just satisfaction of being the one to crack this!

The worst part is that because of the huge drop in income for this tax yr compared to last yr (very little work about for my OH in the last yr), if the calcs are correct then we will struggle to pay big time.

ellissa

sloughflint wrote: »

In the bit where you have the full breadown of the calculations, what was the bottom line? £876.18 due?

Yep. Then we paid 1314 and another 438 due this july


I can only assume that the calc for 08/09 has not taken into account that we will be paying 438 in july

who knows? Will be a long phone call on Tues and HMRC will probably think we're stupid!

SnowMan

Are you sure that the total tax liability for the 2008/2009 tax years is not £884.14? The confusion that has arisen would be that HMRC mean by “total income tax due” the remaining tax owed whereas everyone here is assuming that they mean the total tax liability for the year.

And so after the on-account payment for 2008/2009 of £438.09 paid in January 2009 you are left with £446.05 to pay.

Because the tax is less than £1,000 for the 2008/2009 tax year you do not have to pay by on-account payments. Hence there is no longer a need to pay the second on-account payment for 2008/2009 in July and that is why they are asking you to pay the balance of £446.05 by 31/1/2010.

Note for the 2007/2008 tax year on-account payments had to be made if tax was more than £500 and this is why initially you had to pay on-account tax for 2008/2009.

I may be wrong but it would explain everything. And obviously check it out with HMRC in any case.

larmy16

I expect you do know this but I pay a certain amount monthly into my tax account - it may not be enough to cover the entire bill but at least there is some on account towards it. You can set it up if you do online banking. I was flummoxed by the second tax year account as self employed also. As people have said, you pay six months in advance. I paid half this January and I think I pay again in July?

Do ring them though - I have found them to be incredibly helpful despite their reputation!

sloughflint

That pesky SnowMan may just have cracked it.

Have some carrots at the ready just in case Ellissa.

SnowMan

sloughflint wrote: »

That pesky SnowMan may just have cracked it.

Have some carrots at the ready just in case Ellissa.

:rotfl::rotfl::rotfl:

I feel like someone trying to answer the last clue in a crossword when someone else has done all the hard work to get to that stage.

I may be wrong of course. I'm no tax expert just a self-employed person filling in the same forms.

I was thinking the same as everyone else until Ellissa said there was no mis-type in the figures, and the absence of any adjustment for the £7.96 didn't make sense. And when I found an explanation for the balance of 2008/2009 not being paid in July it seemed to fit together.

Will be interested to know if that is the explanation.

ellissa

Well guys, sorry it took ages but we finally have the answer from HMRC...

....turns out we owe £7.93.... it seems the paperwork we received did not account for all the payments on account we had made and we just had to pay 7.93 by end of July 2009.

It gets better... nothing to pay in Jan 2010 either!

So it seems (hopefully) all is good until the next tax return is completed (yawn!)

Thanks for all your help and well done to those very intelligent ones amongst us who had this calculation nailed! I hereby confess that numbers still scare me and I'll probably have more queries for you lovely people when the next tax return is due!!!

Ells x

gabyjane

glad you got it all cleared up! i did mine last night after really not wanting to as always think i will muck it up! got to the end and have no idea whats going on now as had a payment on account due july 09 for £777 and now says £444 for jan 2010 so i have no idea but will prob owe both! rung them today and have to wait for it to go on the system..will update then!