Self assessment help

A.J

Hi all,

I need to complete a self assessment tax return for the first time and I was hoping that you may be able to offer some advice (and hopefully reassurance that I've done it correctly!).

I've started a network of websites and make money through online ads (Google Adsense) and affiliate sales (mostly Amazon.com and Amazon.co.uk).

In the tax year 2013-14 I made a profit of £2635. (Revenue of £4338 and expenses of £1703).

I'm also employed full time and earned £26k before tax (and paid £3.3k tax).

I just tried completing the self assessment form online and it gave a figure of £773 tax due. I haven't submitted it yet.

Does that figure sound correct?

I basically put in my revenue and expenditure and nothing else. I didn't claim any tax deductions, etc. I wanted to keep it simple, as I don't really know what I'm entitled to and don't want to risk claiming for something I shouldn't.

So, I guess I have two questions:

1) Does £773 tax (in addition to what I paid through my employer) sound reasonable for what I earned? In the right ballpark?

2) Am I being stupid not claiming deductions? Am I missing out on anything significant? Bearing in mind that my business consists of working from home on a laptop after work!

Thanks in advance for any comments!

PlutoinCapricorn

As you have until Jan 31st 2015 to submit the 2013/14 return, there is ample time to learn the best way to do it. It is not a good idea to wait until the last minute, but a few more weeks is fine.

The first thing is that I do think you are doing the wrong thing by not deducting allowable expenses.

What I do is maintain a spreadsheet for each tax year. I record income and expenses and prepare the figures in advance so that all I need do is transfer them to the online form and see if my tax calculation is the same as HMRC's. This means learning how they do it, which is a good idea anyway.

PlutoinCapricorn

You have used up your personal allowance in your PAYE job: the amount of tax you paid is 20% of £16,560.

This means that your SE profit will all be taxed at 20%: you have not earned enough to push you into the higher rate band.

There will not be any payments on account as you have not earned enough.

There will not be a Class 4 NI levy as you have not earned enough.

A.J

Thanks a lot for your replies. I really appreciate it!

So, if I'm being charged 20%, how do they get to the figure of £773?

20% of my self-employed revenue is 0.2 * 4338 = £867.60

And 20% of profit would be 0.2 * 2635 = £527

I think you make a good point when you say that I have plenty of time to learn. I guess I'm being a bit lazy, as it all seems so complicated!!

Are you aware of any good books or online guides for a complete tax newbie?!

Thanks again.

purdyoaten

blondebubbles wrote: »

Is the £773 definitely all tax? None of it is NI?

Was your personal allowance £9440? Tax code would be 944L

Profit too low for NI.

purdyoaten

A.J wrote: »

Thanks a lot for your replies. I really appreciate it!

So, if I'm being charged 20%, how do they get to the figure of £773?

20% of my self-employed revenue is 0.2 * 4338 = £867.60

And 20% of profit would be 0.2 * 2635 = £527

I think you make a good point when you say that I have plenty of time to learn. I guess I'm being a bit lazy, as it all seems so complicated!!

Are you aware of any good books or online guides for a complete tax newbie?!

Thanks again.

On the calculation:

1) does the profit equate to £2635?
2) Does your PAYE income and tax show correctly?
3) As blondebubbles queries - what was your tax code?

zygurat789

A.J wrote: »

Thanks a lot for your replies. I really appreciate it!

So, if I'm being charged 20%, how do they get to the figure of £773?

20% of my self-employed revenue is 0.2 * 4338 = £867.60

And 20% of profit would be 0.2 * 2635 = £527

I think you make a good point when you say that I have plenty of time to learn. I guess I'm being a bit lazy, as it all seems so complicated!!

Are you aware of any good books or online guides for a complete tax newbie?!

Thanks again.

Just out of curiosity, how does the detailed calculation actually say the £773 is arrived at?

PlutoinCapricorn

HMRC is the source of the rules, bands, rates etc. The information is all over the place: general principles and figures for different tax years.

http://www.hmrc.gov.uk/working/intro/class2.

http://www.hmrc.gov.uk/working/intro/class4.htm

http://www.hmrc.gov.uk/factsheets/expenses-allowances.pdf


The information is available on the Citizens' Advice website and some accountancy websites.

Have you checked that you put the correct figures into the right fields?

A.J

purdyoaten wrote: »

On the calculation:

1) does the profit equate to £2635?
2) Does your PAYE income and tax show correctly?
3) As blondebubbles queries - what was your tax code?

1) Yes, my profit from my self employment (my websites) was £2635
2) Sorry, show correctly where?
3) Yes, my tax code was 944L

I think I've filled everything in correctly.

Does £773 tax on a £2635 profit seem too high?

Thanks for all of your help!

purdyoaten

A.J wrote: »

1) Yes, my profit from my self employment (my websites) was £2635
2) Sorry, show correctly where?
3) Yes, my tax code was 944L

I think I've filled everything in correctly.

Does £773 tax on a £2635 profit seem too high?

Thanks for all of your help!

Based on what you have told us it should be exactly £527. When asked the above questions, I was asking you to look at the 'view your calculation' option to see if the figures correspond. Something is clearly wrong and this will show that.

A.J

Ah, I see! Sorry. Very new to this as I'm sure you can tell!!

On the "view your calculation" page it says:

Total tax, Class 4 NIC and Student loan due for 2013-14 £773.40
Plus
First payment on account for 2014-15 £0.00
Payment due by 31 January 2015
£773.40
Second payment on account for 2014-15 will be due by 31 July 2015 £0.00

Is it my student loan payment that is making up the extra?