Wrong Personal Allowance - Online Self Assessment Form

cwcw

My online SA form has a non-editable personal allowance based on the standard tax code for 2012-13. However, I was issued with a different tax code for 2012-13 owing to some tax relief on professional fees. My own tax code (which I can even see online in the tax code notifications section) gives me a higher personal allowance.

I have tried to contact HMRC via the online messages. At first they gave an irrelevant reply as though they'd not read my message, then they promised to look into it and get back to me in 5 working days, and now (several weeks later) they are ignoring any further messages I send. Due to work commitments I find it hard to spend ages trying to get hold of them by phone, but when I do get the opportunity I find myself on hold for too long and have to give up.

Until my personal allowance is corrected on my SA form, how can I possibly submit it and be made to pay more tax than I should? I need to submit by 31st Dec to pay back through PAYE so I'm running out of time, but HMRC give a new meaning to 'incompetent'. :mad:

PS. Does anyone know how to get to messages on the HMRC site once you had read them? Mine seem to vanish without a trace once first opened from the main page.

jem16

cwcw wrote: »

My online SA form has a non-editable personal allowance based on the standard tax code for 2012-13. However, I was issued with a different tax code for 2012-13 owing to some tax relief on professional fees. My own tax code (which I can even see online in the tax code notifications section) gives me a higher personal allowance.

The personal allowance is standard and everybody is entitled to it which is why it's non-editable.

As you complete the form, you will also complete the section for professional fees. This will then give you the extra allowance.

The tax code is irrelevant.

Laurajo_2

Your personal allowance and what's on your PAYE code are two totally different things. Your PAYE code is just used by the employer to work out how much tax they should deduct. At the end of the year, your total income less any allowable deductions (such as employment expenses etc) is taken, the personal allowance (9440 for under 65s) is deducted, and tax is calculated on this amount (obviously, there are other deductions etc available, but that's in simplest terms). Any tax paid is deducted from that amount, and the balance is the amount you owe, or the repayment due to you.

Just to be clear, your tax code is not your personal allowance.

cwcw

Apologies if I wasn't clear, but my professional fees are from a previous year and the tax relief was applied by HMRC by way of increasing my personal allowance for 2012-13. They issued a PAYE coding notice and explained what my personal allowance was for the year. The personal allowance used within my online tax calculation is the standard £8,105 for 2012-13, rather than my own personal allowance which was higher.

NB. The effect of this is that the online calculation takes the amount from my P60 which my employer had already used my own, higher personal allowance for, and re-taxes it at a lower personal allowance. Net result is my SA means paying income tax for my additional self employed earnings, PLUS my employed earnings for the amount between the standard allowance and my own allowance. This is not right.

Laurajo_2

Your PAYE code is the amount that you can earn before the employer starts taking tax from you. They will increase this for such things as employer expenses, benefits, pension contributions etc. the tax deducted via your PAYE code isn't necessarily correct.

It isn't your personal allowance. No one has an individual personal allowance, other than the standard one of 8105 for under 65s in 12/13. Put your employment figures in, put your expenses for 2012/13 in, put your tax deducted in and (assuming you have no other sources of income or pension contributions, gift aid etc) that should be it.

Your PAYE code is hmrc estimating how much tax you should be paying - it is designed to prevent large under or overpayments, and to collect tax due from previous years. It has no bearing on self assessment, you just need the figures from the p60.

Laurajo_2

It looks like to me, too little tax has been deducted under PAYE and you now have to pay the difference back.

cwcw

Thanks, but my PAYE tax coding notice for 2012-13 states a "tax free amount", which is my personal allowance of £8,105, plus my allowable expenses of professional fees from 2011-12. These fees were a one off, I cannot put them in again in my 2012-13 tax return. The calculation takes no account of them and hence I am not getting my tax relief from them.

I am employed and self employed. Simplistically speaking, my employed income has been taxed already through PAYE and as shown on my P60, so my SA calculated amount owed for tax should come out at 40% of self employed income. However, it's coming out at 40% of self employed income + 20% of the difference between £8,105 and my own personal allowance. It is taxing part of my tax free amount!

cwcw

Laurajo wrote: »

It looks like to me, too little tax has been deducted under PAYE and you now have to pay the difference back.

But my P60 calculation uses the tax free amount that HMRC themselves issued me with?! It seems crazy that the HMRC can simultaneously tell me a tax free amount of £X on one page, but £Y on the calculation within the return (where £Y is conveniently lower!).

Laurajo_2

I think hmrc have assumed that you would be continuing paying the expenses in 2012/13 and have increased your PAYE code to reflect this. Therefore, your PAYE code has been adjusted to give you tax relief on expenses that you haven't actually paid during 2012/13, ergo you have not paid enough tax on your employment.

What should have happened is you should have received a refund for your expenses incurred in 2011/12, somewhere lines have been crossed and they have assumed the expenses would be in 2012/13. Did you get relief for your expenses in 2011/12 ie claim them on your tax return?

The PAYE code is only used to calculate what tax gets deducted under PAYE, not your overall tax liability. There are plenty of people on this forum who have ended up paying too much or too little tax as a result of incorrect PAYE codes...unfortunately, they don't make the self assessment system easy to understand, your PAYE code is pretty irrelevant.

Laurajo_2

cwcw wrote: »

But my P60 calculation uses the tax free amount that HMRC themselves issued me with?! It seems crazy that the HMRC can simultaneously tell me a tax free amount of £X on one page, but £Y on the calculation within the return (where £Y is conveniently lower!).

Yes, that's the tax free allowance that the employer uses. So you can earn (in practise) 1/12 of that amount before your employer deducts tax.

If too much or too little tax is collected from this source, the balance will be collected or repaid when you complete a self assessment return.

cwcw

I did not claim any relief in previous years, so it looks like what has happened is HMRC have given me the relief from 2011-12 through my 2012-13 tax code, and then taken it back off me again, on the basis that I haven't had the same expense in 2012-13?