Underpayment of Tax in SA

mr_pjr

I am just filling out my first SA for 2011-12, during this year I was both employed and self employed.

I have entered all the figures and come up with the figures which all make sense. There one thing that is confusing me is I underpaid tax on 2011-12 which appear on my 2012-13 coding notice, I have entered this in the SA where it asked.

My calculation now shows:
How we have worked out your income tax

Amount Percentage Total Pay, pensions, profit etc £7,133.00 @ 20% £1,426.60 Total income on which tax has been charged £7,133.00 Income Tax charged £1,426.60 minus Tax deducted From all employments £1,552.00 Underpaid tax for 2011-12 included in your tax code for 2012-13 £252.20 Total tax deducted £1,804.20 Income Tax overpaid £377.60

Shouldn't the underpayment mean I still owe them tax of £126 instead of them owing me? They seem to have added it on as if I have overpaid already.

Thanks in advance for your help.

madgagoo

It's because you've entered an underpayment for 11/12 in your current years tax code, so HMRC are assuming that this will be collected by April 2013.

Are you sure you've got your years right? I suspect it is an estimated underpayment for 11/12, in which case the computation looks correct to me.

Alternatively it could be a 10/11 underpayment in your 12/13 code, which tbh makes a bit more sense, in which case you should leave it out and enter it on next year's return.

mr_pjr

I got my years wrong. The underpayment is for 2010-2011.

Thanks for spotting this out. All makes sense now.

Many thanks

mr_pjr

The above advice was very helpful and it all makes sense now.

I do however have one more quick query.

I have a loss of around £700 this year due to startup costs. If I put this against this tax return year (2011/12) it results in a repayment of around £140. If I don't put it against this year I end up owing 20p for this year.

As I have that £250 owing that will be placed in my 12/13 return am I better off carrying the loss forward to help reduce that amount?

Your help is appreciated. I am slowly getting my head around this all!

Thanks in advance.

madgagoo

The £250 deduction should be paid by April 2013, by it being in your PAYE code it means that your employer will be deducting an extra £20odd each month in tax, meaning that the underpayment from 10/11 will not exist when you come to do your 12/13 return.

The reason you have to enter it on your return is to ensure that the correct amount of tax has been paid & if you didn't enter the underpayment figure then it would appear too much tax had been deducted at source and you'd end up with a repayment that wasn't due.

As for whether to carry a loss forward, I'm afraid that's out of my area of specialism (still learning!) so I can't really help. However, hopefully the above shows you the underpayment shouldn't affect your decision.

mr_pjr

Thanks for your reply.

I'm now longer employed so not paying through paye which confuses things slightly.

I'm sure what I have entered on my return is correct, it made no mention of anywhere to enter this specific underpayment (but will do next year I gather).

I just wondered if I could make life easier for myself by shifting my loss forwards or backward,

Thanks again