Tax seems very high

ravravrav

I've just done my tax return online and I've only made under £3000 profit for the year and it's come up with tax at £800! It's the first tax return I've filled in and I don't know if there is any sections which I've filled in wrong but without knowing the finer details - does this seem about right? It's over 25% of my profit!:eek:

purplepixi

Are you sure you filled in the right boxes?

Here are the rates for 2010-2011 http://www.hmrc.gov.uk/rates/it.htm (Tax)

And national insurance: http://www.hmrc.gov.uk/working/intro/class2.htm#1, http://www.hmrc.gov.uk/working/intro/class4.htm

I'm most certainly not an accountant, but that doesn't sound right.

Although, if you've only just filled it in now, you may have got a late fee, online forms should have been filled in earlier in the year.

ravravrav

Thanks for your reply; I do think it's too high. I got my tax form late which is why I didn't fill it in by Jan 31st, but also when I did speak to HMRC they said I would be charged interest @ something like 2.5% per month. There is no mention of a fine or penalty fee on the tax return which is why I'm surprised it's so high. I think I'm going to call them to ask more.

blinko

25% is about right the 3000 is net profit right.

See above for tax tables

PAYE and Corporation tax are 20%

ravravrav

Where on the table should I be looking as I can't see where it gives a figure of around 25%.

vintagebrighton

Do you have another job? It sounds like you're being taxed as though you have a PAYE job aswell which is using all your tax allowance. On 3000 profit you shouldn't have to pay tax as your personal allowance is 7000 something.

ravravrav

I do have another job which is PAYE which is using up my tax allowance. I'm still suprised that on something like 3000 for which I'm working very hard trying to earn a bit more money, I'm being taxed quite a high percentage..

McKneff

Why didnt you give all the information in your first post, it would have saved people a lot of time.....................

ravravrav

I honestly didn't think it was relevant. My mistake.........

ravravrav

For the benefit of any other newbies I've found a link for breakdown of the tax. It explains how they came up with the tax sum quoted.

I notice that around £250 of it is student loan repayment. As I'm already paying £150 or so through my employer I'm surprised it's an almost an extra £250 for me earning an extra £3000. I clicked yes for the bit about receiving a letter for 'income contingent loan repayments'. I have received statements from the SLC but I don't think they were requests for payment - or is the statement the same thing?

nathand_2

It was relevant. You're already paying tax and will have used up most/all of your tax-free allowance. Therefore you're being charged 20% tax and 9% (pretty sure that's the rate for SE) NI Class 4.