Help needed with tax bill and self assessment

Bustle

Hi, hoping someone can help with my tax enquiry to do with self assessment as the local tax office have sent me a demand for quite a large tax amount.:eek:

The background is that I have a full time job and pay tax as normal via my payslip, etc. In addition in 2004/05 I did some extra work in the form of market research for which I earnt some income (well below the personal allowance)

I completed an online self assessment form detailing the secondary income (both self employed and employed work) but did not detail my full time income (I thought this was nothing to do with self assessment – lesson learnt)

Anyway, the tax office have said that I did not enter on my return my income from my full-time job or a medical benefit we get (news to me!)

The sheet they sent me looks like below:

Tax Calculation for 2004/05

Income received (before tax taken off)
Pay from all employments xxxxx
Plus benefits xxx
Total from all employments xxxxx
Profit from self-employment xxxxx
Total income received xxxxxxx

Minus
Personal allowance 4745
Total 4745
Total income on which tax is due xxxxxx

How I have worked out your income tax

Pay, pensions, profit, etc xxxx @ 10% xxxxx
xxxx @ 22% xxxxxx
Total income on which tax is charged xxxxx

Income tax charged xxxxx
Plus student loan repayments xxxxx
Income tax due xxxxxx A

Minus Tax taken off
From all employments xxxxxx
Total tax taken off xxxxx B

Total income tax due xxxxx (difference between A + B is the scary amount they want me to pay)


I don't understand why student loan repayments are added to the figures as these were repaid as part of my full time job and deducted from my salary and shown on my pay slip.

Also, I thought the personal allowance was separate to full time work (eg if I let a room I could earn the personal allowance tax free).

I was a bit shocked to find out I owed so much when the profit from self-employment was so little and I pay a fair bit in tax from my full-time job - seems pointless doing the extra work.

Will be contacting the tax office tomorrow in the hope they have made a mistake. :rotfl:

Hoping someone can help in the meantime. Hope I have made sense. :rolleyes:

jem16

Without actual figures it's a bit difficult to tell you whether your tax demand is correct or not. However the Tax Calculation follows the normal pattern.

All your taxable income would be added together - paid employment, self employment, interest from savings, dividends - so it should all have gone on the self assessment form. Student loan would gon there too.

Your personal allowance would normally be used for your full time work.

Basically any extra work would be taxed at 22% or 40% depending on how much you earn in full time employment.

Bustle

Thanks for that. As you say it seems correct. What if I cannot pay it all in full? Is it straight to prison without passing Go?

Think I know where my reclaimed bank charges will be going....

ctm_2

As has been said, without actual figures, we can't see if all is correct or not.

You should include ALL income on your tax return so that all tax paid can be taken into account.

You only get the personal allowance once, and your total tax liability is calculated on your total taxable income, not on a per income basis. Assuming the correct tax was paid at your job, then the only extra due would be to cover self employed earnings (i'm assuming all the market research was self employment). As you would have already used your personal allowance and 10% band at your employment the self employed income would be allocated to the basic rate band (22%), so your bill should be roughly 22% of your self employed profit, and you should have been expecting this and put that amount aside to pay the liability.

Student loan repayments - Again, we need details of amounts deducted by your employer, and the amount the calculation has charged. You did enter the amopunt of student loan payments deducted by your employer at box 1.39 on the employment page of the return didn't you??

Bustle

The plot thickens. The local tax office have added the £1843 student loan repayments into the section under Income tax charged.

I don't have a copy of the 2004/05 tax return to see if I included these repayments on the tax return (possibly didnt) or my P60. Have requested duplicate P60 from my employer.

I rang the student loan company and they said that they issued a stop on the repayments in Feb 2004 but never issued a statement (they are sending one in the post)

Seems that the tax office think I haven't paid this loan back when I have (years ago) - called them back and said that they needed proof that this loan has been repaid. Will send them a copy of the statement the SLC are sending me. The tax office said they could only see £260 repaid on my P60 for 2004/05.

22% of 1843 is £405 - big difference from the £2243 they are demanding.

Can put the figures up but prefer to keep it confidential on a public forum. I suspect I did or did not put a figure into my self assessment correctly and it has churned out this figure.

Think I will fill in that appeal sheet they have sent me and explain that there is an issue with the student loan repayment figure.

ctm_2

When you say 'The local tax office have added the £1843 student loan repayments into the section under Income tax charged' do you mean that that is the amount that you actually paid through your employer, but has also been added onto your tax liability?

Bustle

Yes - it looks like what I have already paid back via my full time employment. Why it has also been included under tax charge I can't explain.

(It was deducted and stated on my pay slips as such)

The tax office lady was saying "Well we only have £260 showing on the P60 for that year."

SLC also told me that againts my file there is a note "further file to come from HMRC'

Profit from self employment work was £1526 for the year but tax demand they want is £2243 :mad:

Bustle

Wll the tax office have written to amend the statement of account.

"The details of the amount included in the SA calculation will be sent to the student loans company. As this amount exceeds the outstanding balance of the loan the slc will arange for a credit in respect of the excess to be made to the self assessment statement of account.

If you consider the amount of student loans repayment collected through self assessment to be excessive you can make a request for an amount to be informally stood over.

I have informally stood over the difference between the full amount for the yera and the actual amount which is £1583. Let me have a letter if this is what you want."

Can anyone translate this please?

malcindebt

OK, first of all, you need to find out if you have shown the student loan deduction on your P60 at box 1.39 on the employment page of the tax return. It could be that as you have ticked the box on the return that confirms you have an income contingent loan, it looks as though you have not paid any payments.

2ndly, if you have ticked that box, there will be a student loan payment to make, as assuming your employed income is in excess of £15k, then you have to pay some based on your self employed income.

If you have paid more than you need to cover the balance of the loan, student loans will normally arrange for this to be repaid to you. This is what the letter from HMRC is saying, they will hold back £x as this is what they feel is overpaid- if you agree with this then write to them and advise you agree, this will then show as a crdit on your statement.

Bustle

Ok thanks. Will send a letter tomorrow. In fact the tax office may have adjusted the statement of account they sent me already as there is a 'CR' next to the figure of £1583, which reduces my tax liability significantly!

Will wait and see what the Student Loans Company and tax office decide.