Capital gains self assessment - payment on account or not?

smallpurplepill

Hi all

I think this may be a silly question, but hopefully someone can reassure.

This is the first year I've had to do a Self Assessment which I am submitting shortly (still collating information).

I am a 'standard' employee and pay income tax/NI through PAYE, the reason I have to submit a self assessment this time is capital gains tax from a share sale in 2009/10 tax year.

Now I am reading about 'payments on account' and how we may be required to make them for next tax year (10/11) based on an "estimate" of the same amount of tax as this year.

The share sale was a one off and is not 'income' as such, so my tax liability will be just the PAYE I am already paying (give or take a small amount for Zopa etc) rather than another lump sum.

Is it correct that I now have to pay half of next year's tax as well on the 'assumption' that I will have this gain every year? or have I misunderstood something and it is only for income that this applies? (I do have the money if required to pay this, but as I am hoping to apply for a mortgage would prefer the amount going out to be correct rather than an over-estimate obviously!!)

Sure I am going mad!!!!

Mikeyorks

No. You don't have to make POAs on the CGT element. And ....... as you don't make POAs either where 80% or more tax is deducted at source. Then that rules out the PAYE element creating a POA requirement.

smallpurplepill

Thanks for the quick response Mikeyorks, puts my mind at rest! :-)

Mikeyorks

In return .... my question!

Does Zopa pay you gross interest? If so how would you normally account for that outside the Return that's been needed for the CGT disclosure

smallpurplepill

Yes, the interest is gross as it comes back as the interest rate we set for that loan minus any fees etc - Zopa doesn't deduct interest on our behalf the way banks do. As a result it has to be taxed separately (I believe Zopa submit details to the Revenue of the amount paid etc).

From the site http://uk.zopa.com/ZopaWeb/public/help/help-faqs-lending.html:

Lenders will need to show the interest they receive in a tax year on their self-assessment returns. Anyone who does not have to fill in a tax return each year should contact their Tax Office and tell them about the interest they are receiving. If they pay tax under Pay As You Earn (PAYE), the Tax Office will normally adjust their tax code to collect the tax that is due on the interest. In some cases, they will have to fill in a tax return and the tax will be collected through their self-assessment.

This (2010/11) is the first tax year I've been doing Zopa so if I get a self assessment next year I will put it on there under 'untaxed interest income', otherwise if I manage to 'escape' SA I'll need to ask for it to be done through the tax code as it is only a relatively small amount. (Would really rather pay this sort of thing in a lump sum so it doesn't come out of ongoing income but I don't think I get a choice :cool:)

Mikeyorks

smallpurplepill wrote: »

I'll need to ask for it to be done through the tax code as it is only a relatively small amount. (Would really rather pay this sort of thing in a lump sum so it doesn't come out of ongoing income but I don't think I get a choice :cool:)

Thanks for all that .... my learning bit for the day.

On the quote above. Yes you can have up to £2500 in 'other income' coded out.

You can pay it in a lump by doing a 'voluntary direct payment' .... if you get out of SA. But whatever you do .... don't go there. Nightmare process and prone to error. I appreciate 'tidy minded' .... but it is not worth it. Stick with SA if you really want to do a lump sum.

The PAYE route is normally via a P810 (or equivalent). It does work 'in arrears' so needs an eye keeping on it .. but it's not so painful.