What tax am I liable to pay, help please ?

Banana_Hammock

Hi all been a while for me,

I finished self employment end of Nov 2015 and have my tax ready to pay in July, I then went into employment start of Dec 2015 but although on correct tax code 1060L my tax was never deducted I spoke to HMRC and they said I would be billed for my 4 months working tax once the financial year ended, I put away the exact figure I should be paying in preparation, I am on £26000 a year in new job so my tax should be £256.67 per month for 4 months to finish the year, but my P60 has arrived showing £714.84 for the 4 months to pay from my employed contributions which is a shortfall of £311.83.

Has something not been calculated correctly ?

My accountant advised me to put the money away so don't worry I'm not after going on a shopping spree I just find it confusing having never been employed before and TBH just want to be able to be free from my self employed HMRC when payment is due and not have a sting in the tail arise down the line.

Accountant said my 4 months wages will be added to the previous 8 months earnings as a full year of income to be taxable, I've no gripes just wish to know which figure will I be paying,

Many thanks for reading and would love any help.

CLAPTON

Banana_Hammock wrote: »

Hi all been a while for me,

I finished self employment end of Nov 2015 and have my tax ready to pay in July, I then went into employment start of Dec 2015 but although on correct tax code 1060L my tax was never deducted I spoke to HMRC and they said I would be billed for my 4 months working tax once the financial year ended, I put away the exact figure I should be paying in preparation, I am on £26000 a year in new job so my tax should be £256.67 per month for 4 months to finish the year, but my P60 has arrived showing £714.84 for the 4 months to pay from my employed contributions which is a shortfall of £311.83.

Has something not been calculated correctly ?

My accountant advised me to put the money away so don't worry I'm not after going on a shopping spree I just find it confusing having never been employed before and TBH just want to be able to be free from my self employed HMRC when payment is due and not have a sting in the tail arise down the line.

Accountant said my 4 months wages will be added to the previous 8 months earnings as a full year of income to be taxable, I've no gripes just wish to know which figure will I be paying,

Many thanks for reading and would love any help.

when you fill in your self employment return you also put your PAYE figures and HMRC will calculate your total tax due:
they when deduct your PAYE tax and then charge you the rest via SE.

Your PAYE was worked by your employer out based on your tax code : this would normally be 1060L (without anything like M1 or Wk1 after it)

in this case you would receive 10600 tax free allowance before you paid any tax
you income would be about 26000 x 4 /12 = 8666 so you should have paid NO tax

what exactly was your tax code ?

[Deleted User]

The op has calculated the tax due on a code of 1060L on a month 1 basis. The tax due on the four months salary would £1026.66 which is indeed £312 more than what was deducted.

The employer would have had to operate this code as the op had no P45.

However, as Clapton says - what code was operated? Also is the £26000 before or after any pension contributions?

Banana_Hammock

My tax code is 1060L my first month tax and NI was taken out, second month I wasn't charged tax and refunded the first months tax deduction also, then month 3 and 4 I didn't get any tax taken just NI for all 4 months.

I paid a balancing payment for my self employed tax in Jan and also the advance half payment of my outstanding tax for 14/15 which leaves me with my final half of tax to pay in July now which I know the figure for, the tax code is correct but I didn't understand the decrease in tax owed, I wondered if I wasn't charged tax as my account will show me with large payments made in Jan and HMRC thought better to wait until my final closing accounts submitted.

Thanks very much for replying.

Banana_Hammock

Yes my accountant said I should have been put on YearOne from soon as I started, I am on gross £26000 before any pension deductions.

Thank you 👍🏻

Banana_Hammock

I had to give a UTR number when starting as I had no P45 correct.

Thanks

CLAPTON

Banana_Hammock wrote: »

My tax code is 1060L my first month tax and NI was taken out, second month I wasn't charged tax and refunded the first months tax deduction also, then month 3 and 4 I didn't get any tax taken just NI for all 4 months.

I paid a balancing payment for my self employed tax in Jan and also the advance half payment of my outstanding tax for 14/15 which leaves me with my final half of tax to pay in July now which I know the figure for, the tax code is correct but I didn't understand the decrease in tax owed, I wondered if I wasn't charged tax as my account will show me with large payments made in Jan and HMRC thought better to wait until my final closing accounts submitted.

Thanks very much for replying.

can you look at each payslip and tell us what letter /numbers were after the 1060L like e.g. M1, Wk1, noncum or anything else like that.

Banana_Hammock

There is no numbers or digits after the 1060L just shows week 9-12 on the 4 and payment method is "M".

Thanks

Banana_Hammock

P60 says £8645.02 earned, £1944 is equal or exceeds LEL and earnings above Primary Threshold is £5941, the "this employment" seconds has a red band around it.

Thanks

Dazed_and_confused

There is really only one way to get an accurate figure of tax to pay - as Clapton has already said you need.to complete your tax return. You will never have a bill relating to just the new.job, as you need.to complete a tax return you will get a bill based.on your overall return (which will include.the new.job)

This will give you the tax due for the year based on your self employment and new job (£8645 per your previous post) and any other taxable income.

Once submitted to HMRC they will recalculate your Jan and July 2016 payments (if necessary) or you will have a balance to pay next January.

Don't forget your self assessment calculation will not take into account anything you paid in January. This will be taken into account on your tax statement of account.

Darksparkle

Banana_Hammock wrote: »

P60 says £8645.02 earned, £1944 is equal or exceeds LEL and earnings above Primary Threshold is £5941, the "this employment" seconds has a red band around it.

Thanks

The parts referring to LEL, PT etc are for NIC not tax.

What does the P60 say regarding tax?