Made over £50k last year - what forms to complete for additional earnings (if any)?

malkie76

Don't know too much about income tax, so any help appreciated - I did telephone my tax office, but they weren't particularly clear.

I made over £50k last year, and I'm concerned I need to declare additional earnings which won't have been taxed at 40%.

1) The majority of my savings are in ISAs which are free from tax, however I have a significant sum in a regular savings account which won't have been taxed at 40% (correct?). How do I declare this and pay the difference ?

2) I buy shares through work (pretax) and get dividends on the shares I hold. The dividend just buys more shares (ie I don't collect it) and shares are locked in for 5 years to avoid any tax. Do I need to declare any of this?

3) I received a significant bonus early in the year in the form of shares which I sold immediately. I apparently did pay 40% tax on this however I received some back as a rebate as at that point in the year (January) I hadn't crossed the £38k 40% tax bracket in total earnings. I'm concerned that after I'd received this rebate I crossed the 40% tax threshold and need to pay the difference back.

Should I just write all of this in a letter an send it to my tax office with copies of my P60, statement of earnings from the bank, and a copy of the share reward I cashed in ?

Any help appreciated !!

jem16

malkie76 wrote: »

Don't know too much about income tax, so any help appreciated - I did telephone my tax office, but they weren't particularly clear.

I made over £50k last year, and I'm concerned I need to declare additional earnings which won't have been taxed at 40%.

1) The majority of my savings are in ISAs which are free from tax, however I have a significant sum in a regular savings account which won't have been taxed at 40% (correct?). How do I declare this and pay the difference ?

Normally you would phone up HMRC and tell them that you have some untaxed savings income.

2) I buy shares through work (pretax) and get dividends on the shares I hold. The dividend just buys more shares (ie I don't collect it) and shares are locked in for 5 years to avoid any tax. Do I need to declare any of this?

Dividneds have to be declared whether reinvested or not, so yes.

3) I received a significant bonus early in the year in the form of shares which I sold immediately. I apparently did pay 40% tax on this however I received some back as a rebate as at that point in the year (January) I hadn't crossed the £38k 40% tax bracket in total earnings. I'm concerned that after I'd received this rebate I crossed the 40% tax threshold and need to pay the difference back.

If you are on PAYE your tax code will autolatically have taken the correct tax over the course of the whole tax year so it should all be correct.

Should I just write all of this in a letter an send it to my tax office with copies of my P60, statement of earnings from the bank, and a copy of the share reward I cashed in ?

A phone call should suffice but you can write if you feel it will help.

I assume you don't normally complete a tax return?

malkie76

Thanks for your help so far!

I've always been led to believe that the share scheme at work is a good tax dodge, the downside being I need to leave any purchased shares in for 5 years before selling them to avoid any tax. I was under the impression that additional shares bought within the scheme was also free from tax assuming I didn't sell those either within 5 years - I guess I should check with the rewards package people at work.

Regarding the shares bonus I immediately sold - it never appeared on my wage slip hence it was totally outside of PAYE. I got the share reward, then sold it on the same day. The holders of the shares are instructed to take 40% of the shares off for tax and I got the rest. However, the next month in my wage slip I received a large amount of money which I didn't understand. So, I called the payroll people who got me to call a shares person, and they said the money in my wages was due to me being incorrectly taxed at 40% for the bonus as at that point I had not crossed into the 40% bracket. Later in the year I did cross that threshold so I'm worried that I should have to repay that rebate back.

(FYI most of the people who receive those sorts of awards are 40% tax payers hence the system automatically removes 40% of the reward as tax)


You assume correctly that I've never done a tax return (in this country). I made ~£45k last year and called my tax office who said there was nothing I needed to do, so I don't exactly have the greatest of confidence in my tax office to give me the correct information.

I'm trying to be upfront and transparent about my earnings - I don't want (a) a nasty bill from HMG with interest or (b) prison time!

jem16

malkie76 wrote: »

Thanks for your help so far!

I've always been led to believe that the share scheme at work is a good tax dodge, the downside being I need to leave any purchased shares in for 5 years before selling them to avoid any tax. I was under the impression that additional shares bought within the scheme was also free from tax assuming I didn't sell those either within 5 years - I guess I should check with the rewards package people at work.

I would certainly check. It may be that CGT is avoided rather than dividend income tax. Hiowever I can't say for sure - what I do know is that normal investments must declare reinvested dividends.

EDIT

I just had a look for info on share schemes re dividend payments. If it's a Share Incentive Plan it seems that as long as you reinvest them in the company and keep them for at least 3 years then you don't have to pay income tax. You can do this for up to £1500 of dividends.

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/WorkingAndPayingTax/DG_10022224

However I don't know which kind of plan you have to may still be best to check.

Regarding the shares bonus I immediately sold - it never appeared on my wage slip hence it was totally outside of PAYE. I got the share reward, then sold it on the same day. The holders of the shares are instructed to take 40% of the shares off for tax and I got the rest. However, the next month in my wage slip I received a large amount of money which I didn't understand. So, I called the payroll people who got me to call a shares person, and they said the money in my wages was due to me being incorrectly taxed at 40% for the bonus as at that point I had not crossed into the 40% bracket. Later in the year I did cross that threshold so I'm worried that I should have to repay that rebate back.

That's different. It may be the case that you are liable for extra tax. Again best to check with your shares people.

You assume correctly that I've never done a tax return (in this country). I made ~£45k last year and called my tax office who said there was nothing I needed to do, so I don't exactly have the greatest of confidence in my tax office to give me the correct information.

Try and explain to them that you were a higher rate taxpayer last year through your earnings and that you have savings income which is not being fully taxed. They should ask you how much it is and may only require an adjustment to your tax code to collect this. A tax return may not be necessary.

I'm trying to be upfront and transparent about my earnings - I don't want (a) a nasty bill from HMG with interest or (b) prison time!

I doubt it would go to prison time. However well done for being aware of what you need to do and trying to get it done.

Have you a tax enquiry office nearby where you could make an appointment and see then face to face?

malkie76

Suggesting prison time was pure drama on my part

I know I do need to speak to people in the tax office, I was coming here first to get some info and perhaps know the right things to say and ask when contacting them.

I'll also speak to the rewards package people too - they actually sent me a statement related to the share reward I sold, so I'm confident I have all the relevant paperwork to hand should I make a face-to-face appointment.

jem16

malkie76 wrote: »

I'll also speak to the rewards package people too - they actually sent me a statement related to the share reward I sold, so I'm confident I have all the relevant paperwork to hand should I make a face-to-face appointment.

I added on a bit of info to my post just as you replied. It gives some info on tax treatment of share schmes.