Help please - struggling to understand self assessment provisional figures

BudgetBoy

Hi

I keep records all year and submit my tax return around this time of year annually. I've done it every year for a number of years now without issue. I bought tax calc software this year and having entered my figures I can't work out why I owe over 2k in tax (I was expecting around half of that to cover child benefit charge). I haven't officially submitted yet while I seek advice.

Here are a few facts about me...

1) I'm employed and get paid via the company I work for. I earn over 50k depending on overtime and bonus.

2) I contribute to my company pension via salary sacrifice.

3) I have 2 kids and my wife gets child benefit. She is a low paid worker around 12k

4) have 1 rental property which operates at a loss currently.

Here are the figures....

Gross pay 56941 from P60
Medical insurance 512 from P111?
Tax deducted 11683 from P60
Interest from banks. 3
Total gift aid 200

Rental income 2850
Adjusted loss for this year 1016

Tax due 2148 (including child benefit charge of 1274 which I was expecting). I don't grasp what the additional tax owing is?

Thanks for any help provided

Dazed_and_confused

The figures in your post don't really make sense, presumably you have completed the rental income part of the return but you cannot have both a profit (2850) and a loss (1016) on the rents, it can only be one or the other.
Might be easier for you to get help if you posted the actual calculation which arrived at the £2148 - this is more likely to show up where the problem lies.

Dazed_and_confused

On reflection after looking at figures again it may simply be that the tax code used during 2014:15 resulted in the extra tax due. What was the tax code on your P60, does this match the code HMRC sent you and what was the code for 2014:15 made up of?

jimmo

Ignoring the bank interest of £3 the tax calculation on your employment income is:
Earnings from P60 56941
Benefits 512
Total earnings 57453
Personal allowance 10000
Net taxable 47453
First 31865 at 20% £6373.00
15588 at 40% £6235.20
Total tax due on earnings £12608.20
PAYE tax deducted £11683
Tax underpaid £925.20
That then needs adjustment to take account of Child benefit and Gift Aid.
Child Benefit: you are happy with the stated £1274
Gift Aid: £200 donated represents a gross amount of £250 where the charity gets the £50 from HMRC. As a higher rate taxpayer you are entitled to higher rate relief of £50.
So, tax underpaid £925.20
Add Child Benefit charge £1274
Deduct Gift Aid £50
You owe £2149.20.
That is close enough to your tax calc result to say that tax calc is not the problem. The problem is why have you underpaid £925. 20 on your employment income.
For starters what code number did your employer use?
Do you know how the code number was arrived at?

BudgetBoy

Thanks both for the replies so far. I changed jobs in Feb 13 and have had a number of tax code letters since. I admit to not being well up on tax codes.....

Letter Dec 13
New tax code for year from 6 Apr 13 to 5 Apr 14 is 1127L, which replaces 956L


Letter Apr 14
New tax code for year from 6 Apr 13 to 5 Apr 14 is 620T, which replaces 1127L


Letter Jul 14
New tax code for year from 6 Apr 14 to 5 Apr 15 is 1179L, which replaces 1183L


Letter Jul 15
New tax code for year from 6 Apr 15 to 5 Apr 16 is 1192L, which replaces 1239L

Looking at the code changes it would seem I don't have a full paper trail. Felt like I was getting these every couple of months.
I don't have any second jobs (other than rental income reporting as a loss).

If it makes any difference my pay was around 5k higher than expected this year due to overtime/bonus.

Thanks very much

BudgetBoy

Forgot to add that code on P60 was 1179L

[Deleted User]

BudgetBoy wrote: »

Forgot to add that code on P60 was 1179L

There is nothing in your breakdown which would suggest a reason why you were on code 1179 as opposed to the normal 1000L As a result you received personal allowances of 11790 rather than 10000, an extra 1790. The 10000 should have been further reduced by 512 to cover your benefit in kind - to 9488. Therefore you received an extra 2302 in tax free allowances. ( 11790-9488) .You are are 40% taxpayer and this would result in an underpayment of £920.80 (40% of 2302).

That explains jimmo's calculation at least.

Can we have a breakdown of the code 1179L which was issued in July 2014?

BudgetBoy

Thanks purdyoaten2. The way you have explained it makes sense, although I can't for the life of me think why I would be on the wrong code.

The Jul 14 letter breakdown is as follows...

Personal allowance 10000
Gift aid. 94
Pension relief. 1745
Total. 11839

Medical insurance. -48 (was only with new company 2 months)

A tax free amount of. 11791 resulting in code 1179L

Thinking about it and understanding better, my previous jobs pension scheme used to result in pension relief, however the new one is salary sacrifice so perhaps they were anticipating similar levels of pension relief?
Cheers

ChuckMountain

HRMC have not updated the tax code because unless you tell them otherwise they will continue to provide you with pension relief. If you notify them that you no longer pay this pension they will change your tax code (which will still be wrong). Also they will make an allowance for medical insurance further reducing your tax code.

This will result in a drop in your monthly pay but won't be hit with a bill other than child benefit.