Owe 60 Pence Tax on £617 Loss

pennypincher3562

Hi

Just filled out my self assessment, made a £617 loss for the current tax year. I got to the last page, where they calculate the amount owed, and expected to see a grand total of 0.

Instead I got the following:

Total tax, Class 4 NIC and Student loan due for 2012-13

£0.60

I am curious where this 60 pence tax comes from? Not too bothered about paying, just want to understand where it comes from.

Thanks
PennyPincher3562

cotswoldaccountant

Did you have any PAYE income as well? The 60p could well be a rounding difference between the employer's PAYE software and HMRC's software.

zygurat789

pennypincher3562 wrote: »

Hi

Just filled out my self assessment, made a £617 loss for the current tax year. I got to the last page, where they calculate the amount owed, and expected to see a grand total of 0.

Instead I got the following:

Total tax, Class 4 NIC and Student loan due for 2012-13

£0.60

I am curious where this 60 pence tax comes from? Not too bothered about paying, just want to understand where it comes from.

Thanks
PennyPincher3562

Did you tick the box to have the loss offset against this years tax paid?

purdyoaten

zygurat789 wrote: »

Did you tick the box to have the loss offset against this years tax paid?

Indeed - the most likely error I fear.

In addition, and a lesser known relief, the op should also carry the loss forward against future Class IV Nic liability. There is no box for this on the 2012/13 return but there is reference to an earlier year.

In the 2013/14 return enter the loss figure in the box:

Adjustment to profits chargeable to Class 4 NICs

Obviously you have to remember to do this next year. the effect is that you increase the lower limit for Class IV by your unrelieved losses.

It has never failed to amaze me over the years how few accountants and tax professionals knew to do this.

The Class 4 NIC loss is independent of the Income Tax loss. An Income Tax loss can be set against income that is not liable for Class 4 NIC, for example, an income tax loss can be set off under ICTA88/S380 against employment income liable to Class 1 NIC. In this case the Class 4 NIC loss has not been used and can be carried forward against Class 4 NIC profits of the same trade.

pennypincher3562

Hi All

Thanks for the quick responses. There was PAYE income declared in there too. As for offsetting loss against this year's tax, I am not aware of ticking that box, but will double check it.

Should I offset the loss against this year's tax, or next year?

Thanks
PennyPincher3562

purdyoaten

pennypincher3562 wrote: »

Hi All

Thanks for the quick responses. There was PAYE income declared in there too. As for offsetting loss against this year's tax, I am not aware of ticking that box, but will double check it.

Should I offset the loss against this year's tax, or next year?

Thanks
PennyPincher3562

If you have paid tax of £123.40 at your PAYE, claim it this year (2012/13). There is no box to 'tick' - the figure goes in the box

Loss from this tax year set off against other income

for 2012–13

And then read my previous post re Class IV National Insurance relief.

If you paid no tax at PAYE in 2012/13, carry it forward by entering the loss figure in the box:

Total loss to carry forward after all other set-offs

pennypincher3562

Hi PurdeyOaten

Thanks for the quick response, however I am slightly confused. You say:

'If you have paid tax of £123.40 at your PAYE, claim it this year (2012/13)’

Sorry, where does the figure £123.40 come from? All I can say at moment is that I pay tax at the end of every month due to my day job, and of course this will be through PAYE.

I have followed your other instruction, and put £-617 in the following box:

'Adjustments to profits chargeable to Class 4 NICs:’

I then get an error message, say that this figure must be greater than 0, should I be putting £617 (+), in this box?

Many Thanks
PennyPincher3562

purdyoaten

1) The tax relief on £617 at 20% is £123.40. Therefore, if you have paid at least that amount of tax, you will be able to claim that back.

2) The figure should be positive i.e. 617, not minus 617. But you have not read my post fully or correctly. The NIC relief is on NEXT YEAR'S return.

This is the relevant part of my post:

If you have paid tax of £123.40 at your PAYE, claim it this year (2012/13). There is no box to 'tick' - the figure goes in the box

Loss from this tax year set off against other income

for 2012–13


If you paid no tax at PAYE in 2012/13, carry it forward by entering the loss figure in the box:

Total loss to carry forward after all other set-offs



So you have tax relief this year of £123.40 and Class IV NIC relief which is claimed on next year's return.

pennypincher3562

Thanks for the great advice PurdyOaten, On my way home, and will sort it out once I get back...

pennypincher3562

Hi PurdyOaten

I have re-read and understood you advice from previous posts. I now realise that carrying the loss against Class 4 NIC, needs to be done next year.

I entered the £123 figure into the following box:

'Loss from this tax year set off against other income

for 2012–13'

Once I submit the return for final calculation, I'm told that total tax repayable to me for 2012-2013 is £48.60. Does that sound right, I thought I'd get the full £123?

Thanks
PennyPincher3562

purdyoaten

pennypincher3562 wrote: »

Hi PurdyOaten

I have re-read and understood you advice from previous posts. I now realise that carrying the loss against Class 4 NIC, needs to be done next year.

I entered the £123 figure into the following box:

'Loss from this tax year set off against other income

for 2012–13'

Once I submit the return for final calculation, I'm told that total tax repayable to me for 2012-2013 is £48.60. Does that sound right, I thought I'd get the full £123?

Thanks
PennyPincher3562

Not £123 (that is the amount of tax you will claim - not the loss amount). It should be 617 - remember?

However - you must be a higher rate taxpayer. if so - you should get £246.80 back.