£4000 tax on £16000 income?

marionbarry

I'm self-employed and recently filled in the assessment forms. I had £18000 income minus 2000 in expenses. The total came out to £4000. The breakdown was like:

Total tax, Class 4 NIC and Student loan due for 2010-11 £2,500
Plus
First payment on account for 2011-12 £1,500
Payment due by 31 January 2012
This amount does not take into account any 2010-11 payments on account you may have already made or tax due for earlier years.

£4,000
Second payment on account for 2011-12 will be due by 31 July 2012 £1,500

---

Does that sound right? It seems extremely high.

Also, I already paid £700 in July which I guess was an estimate based on last year's return. And I think I paid the first half of this year's too (when I did last year's return). What's happening with that? It doesn't seem that it was deducted.

And last year, I made about 13000, 2000 in deductions, and paid £2000 in taxes.

Actually, I guess it's a similar percentage then. But does this look right? I'm originally from the US so maybe that's why it looks really high to me. And what's happening to that estimated tax that I already paid? It's not mentioned anywhere.

Mikeyorks

Easier if you give us the exact breakdown for tax / Class 4 and Student Loan? As the POA of £1500 looks wrong - it should be 50% of the tax due this past year. So - £1250 on the consolidated figure.

This note :

This amount does not take into account any 2010-11 payments on account you may have already made or tax due for earlier years.

- explains the POAs made in Jan / July 11 are not included. Because you've picked your figures direct from filing ...... and it needs a Batch run to pick the payment figures from the SA Accounting database - which is seperate for performance reasons. Login again tomorrow - worst Sat - and they will show.

marionbarry

You're right, the first payment is half of this year's total. But even £2500 on £18000...well, I guess.

I didn't quite understand the rest of your message. If I log in again in the next few days the amount payable will be changed to reflect what I've already paid?

Mikeyorks

The tax due alone on £16k will be £1905 and the SLC will be £90. I'm away from home and 'favourites' at the moment so struggling with the Class 4 threshold. But at 8% above the threshold that's going to be an extra £700+ ?? So - the POA on that will add up to £4k in total.

I didn't quite understand the rest of your message. If I log in again in the next few days the amount payable will be changed to reflect what I've already paid?

.. exactly that. The payments aren't held on the database you've filed on to. So need to be dragged back overnight - to give you the correct picture.

sebastianj

18000 total income? Is personal allowance deducted?
seb

System

£18000 - £2000 = £16000 profit

TAX

£16000 - £6475 (personal allowance assuming under 65 yrs old) = £9525 taxable at 20%

= £1905 tax

Nat Ins

£16000 - £5715 (lower earnings limit) = £10285 at 8%

= £822.8 NIC

Student loan

£16000 - £15000 (threshold) = £1000 at 9%

= £90

Total Liability = £1905 + £822.8 + £90 = £2817.8 for 10/11
not taking into any payments on account already made in January 2011 and July 2011

HTH

marionbarry

Thanks for the information, everybody. I'm still not getting any figure deducted and the "This amount does not take into account any 2010-11 payments on account you may have already made or tax due for earlier years" message is still there. Will they just return overpaid money or is this figure supposed to go down based on what I paid in advance?

Also, they're asking for £4248 but the calculation is 4157.

I don't want to call them because it takes ages to get through, they often can't understand what I'm saying, and they're not terribly helpful.

Mikeyorks

marionbarry wrote: »

I'm still not getting any figure deducted .

You have actually 'Submitted' the Return?? Not just taken it to the calculation stage? As I would have expected it to have updated by now.

Will they just return overpaid money or is this figure supposed to go down based on what I paid in advance?

It will reduce based on the POAs you paid in Jan and July 2011.

Also, they're asking for £4248 but the calculation is 4157.

That difference looks remarkably adjacent to the Student Loan amount that is due? Are you sure it's included in the £4157?