Online SA and Capital gain tax

Paulbacca

No I've never used an accountant for the reason that I've always found self assessment easy to do. It's only with the CGT that things have got slightly more complex but not so much that I can't do it. I've entered all my data into SA online. I've put the entrepreneurs relief claim in as well.

The gain without the allowance and off set loss of £1923 is £19658.
The SA calculation put the gain after these are taken off and my PAYE earnings at £7135. At 10% it looks like I will only have to pay £329.

zygurat789

Paulbacca wrote: »

No I've never used an accountant for the reason that I've always found self assessment easy to do. It's only with the CGT that things have got slightly more complex but not so much that I can't do it. I've entered all my data into SA online. I've put the entrepreneurs relief claim in as well.

The gain without the allowance and off set loss of £1923 is £19658.
The SA calculation put the gain after these are taken off and my PAYE earnings at £7135. At 10% it looks like I will only have to pay £329.

I was just checking that you weren't Nick D'Aloisio

£7135 @ 10% = £713.50, presumeably you are overpaid elsewhere.

Filling in a form on the computer IS fairly easy, the art is knowing what you should and should not put in.

Paulbacca

Yes it is an art. You really do have to read the notes and understand them.

I think your are right and that it's to do with my PAYE.

Thanks for all your help.

Paul

nomunnofun

Paulbacca wrote: »

No I've never used an accountant for the reason that I've always found self assessment easy to do. It's only with the CGT that things have got slightly more complex but not so much that I can't do it. I've entered all my data into SA online. I've put the entrepreneurs relief claim in as well.

The gain without the allowance and off set loss of £1923 is £19658.
The SA calculation put the gain after these are taken off and my PAYE earnings at £7135. At 10% it looks like I will only have to pay £329.

Have to agree with zygurat789. You appear to have entered the figures and arrived at a liability - it must, therefore, be correct. It seems to me that you have a loss of £1923 from somewhere (is this an associated disposal?) which you have taken away from £19658. This leaves £17735 which after the allowance of £10600 leaves £7135 taxable at 10% = £713.50. Have you an overpayment at PAYE?

Paulbacca

The £1923 loss if from my self employed business. I don't generally make a lot of money from it, but this year I had a few extra expenses that put me into a loss. It look like my loss has be added to my allowance but not sure where the I've overpaid!

Pay from employments £37,063.00
Pay from all employments £37,063.00
Total income received £37,063.00
minus
Losses £1,923.00
Personal allowance £8,105.00
Total £10,028.00

Total income on which tax is due £27,035.00

How we have worked out your income tax

Amount Percentage Total
Pay, pensions, profit etc £27,035.00 @ 20% £5,407.00
Total income on which tax has been charged £27,035.00
Income Tax charged £5,407.00

minus Tax deducted
From all employments £5,791.00
Total tax deducted £5,791.00
Income Tax overpaid £0.00 plus

Capital Gains Tax
Taxable Capital Gain £7,135.00
Gains that qualify for Entrepreneur's relief £7,135.00 @ 10% £713.50 £713.50
Capital Gains Tax due £713.50
Income and Capital Gains Tax due £329.50

nomunnofun

Paulbacca wrote: »

The £1923 loss if from my self employed business. I don't generally make a lot of money from it, but this year I had a few extra expenses that put me into a loss. It look like my loss has be added to my allowance but not sure where the I've overpaid!

Pay from employments £37,063.00
Pay from all employments £37,063.00
Total income received £37,063.00
minus
Losses £1,923.00
Personal allowance £8,105.00
Total £10,028.00

Total income on which tax is due £27,035.00

How we have worked out your income tax

Amount Percentage Total
Pay, pensions, profit etc £27,035.00 @ 20% £5,407.00
Total income on which tax has been charged £27,035.00
Income Tax charged £5,407.00

minus Tax deducted
From all employments £5,791.00
Total tax deducted £5,791.00
Income Tax overpaid £0.00 plus

Capital Gains Tax
Taxable Capital Gain £7,135.00
Gains that qualify for Entrepreneur's relief £7,135.00 @ 10% £713.50 £713.50
Capital Gains Tax due £713.50
Income and Capital Gains Tax due £329.50

easy - you have claimed the loss twice - against your PAYE and your CGT. The capital Gain should be £9058 @ 10% = £905.80. You claim loss relief of £1923 against your PAYE at 20% (not against your CGT where you would only get 10% relief) realising an overpayment of £384.60. Total tax due £521.20.

There are three possibilities, it would seem, when completing a return which is slightly outside the 'norm'.

1) the figures are entered incorrectly.
2) The figures are correct.
3) The figures are correct but the best use of them has not been made.

The problem is the utilisation of your losses. If you set against your PAYE income you save tax at 20%, the rate at which you pay. If you set against your CGT, you save tax at 10%. The layperson would not appreciate this. HMRC may assist you in entering the figures but they certainly won't tell you where you can gain most advantage.

I hope you can see the pitfalls of 'a little knowledge is dangerous'. I will never fault anyone for trying to complete SA but you were leaving yourself open for an enquiry here!

Paulbacca

I guess it's for this reason I was seeking advice here. I have made the corrections now and the figures tally with yours.

I have found that hmrc are very helpful and if you have genuinely made a mistake that don't tend to penalise you for it. Certainly not for a discrepancy of a few hundred pounds.

Is claiming loss relief against PAYE common and an accepted way to reduce tax if you have made a loss?

Just seen your edit!

There are obviously benefits to having an accountant that knows about these things. I just want to save myself some money. At the amount I'm making in my spare time it's not cost affective to hire an accountant. This CGT is probably a one off and my SA will probably now continue like normal at only a low turnover.

nomunnofun

Yes HMRC ARE very helpful but they are not there to save you tax - if you had asked for advice on how to claim against your CGT, you would, no doubt, have been suitably informed but would not have been advised of any alternatives - unless things have changed since my day!

The fact that you claimed entrepreneurs relief on its own would have made the return more likely to be scrutinised, even if perfect. I am sure that you are correct in that HMRC would regard the double loss relief claim as accidental; and that would have been the end of it!

The loss can be claimed against any other income or gains providing it is a trading loss. Property losses, for example, have an entirely different treatment. There are other options e.g. carry forward against future profits but I imagine that you are happy with relief at 20% (unless next year is looking very good).

Paulbacca

Yes I am happy.

Thanks for your help!

nomunnofun

Paulbacca wrote: »

Yes I am happy.

Thanks for your help!

No problem. I would say, by way of caution, that I am not 100% sure that the claim to entrepreneurs relief is valid - just not my area. However, there are many on her who do specialise in this area. I would probably hold off for a few days - you have another ten months or so to submit!