Can you please help check a few things for my self assessment?

janeskips

Hello everyone,

I am doing a self assessment for the first time and I am a little nervous. I hope you can help check for me.

It should be fairly simple, my circumstances are not too complicated. I am single, employed in one higher rate tax job paying tax with PAYE, I contribute to a SIPP and get some UK bank interest. No partner, benefits, property, capital gains, foreign income, self employment, additional employment.

I have provided the data online and I am now looking at the PDF copy produced.

For the bank interest, on page 3, section income, #1 it shows the net amount (after 20% tax deduction) for interest. This matches the description but previously when informing HMRC over the phone they would ask me for the gross not net. (Previously I had to inform them to pay the extra 20% as I am a higher rate tax payer but a self assesment was not required) I suppose what I have done is correct for this year and from next year (2016-17 self assessment) it will ask fir the gross since the interest is now only paid without any tax deductions.

For the personal pension contribution (SIPP) on page 4, section tax reliefs, #1 it shows the gross amount which is the net I paid my pension provider plus the 20% relief they claimed on top. This SIPP is something I do on my own as extra, I am also paying into my employer's pension programme (final salary, says 'not contra' on my payslip and shows as deducted from gross pay before tax) which it has not asked me anywhere. My employment form (pink) just has total pay (#1) and tax taken (#2) and my only p11d benefit (#11 private medical insurance) without mention of the employer pension amount. Is the final salary supposed to be entered somewhere?

Starting with my 2016-17 tax code (P2 paper), I have had an underpayment line start to appear. When asked about underpayment I had put 0 since the questions all relate to 2015-16 year. When I look at the tax calculation summary, I think this is incorrect. The description for #8 (Underpaid tax for 2015–16 included in your tax code for 2016–17 – enter the amount shown as estimated underpayment for 2015–16 from your P2 PAYE Coding Notice) fits the description. The online help was not saying this, it was always referencing 15-16 tax code. Should I put the gross amount e.g. 1000 on the front of my latest 2016-17 P2 or the tax owed detailed on the back in the notes section e.g. 400.?

The only "benefit" I receive is 25% council tax reduction for living alone, this is not relevant for self assessment is it?

Thank you
Jane

[Deleted User]

A long post but I can find only two questions:

Salary details should be after pension contributions - what is shown on your p60. Contracted out ended in April 2016.

If the underpaid is for 2015/16 and is £400 - that is what should be entered.

Savvy_Sue

janeskips wrote: »

The only "benefit" I receive is 25% council tax reduction for living alone, this is not relevant for self assessment is it?

No. It's not a benefit, even though you have to 'claim' it.

janeskips

I apologise for the long post. My questions:

1) Although I have the gross, net, tax paid amounts for UK bank interest and although HMRC have in previous years requested (insisted) on me telling them the gross figure, on the self assesment only the net should be written. Is this correct?

2) Other than providing my gross SIPP contribution, I have not indicated my pension with my employer. Is this correct? If this is correct, how does HMRC know I have not paid in above the annual allowance?

3) I should put the tax owed (e.g. 400) for the "underpayment restriction" (e.g. 1000) appearing relating to "tax owed from an earlier tax year" in my 2016-17 P2. Is that correct? The underpayment restriction is deducted from my 2016-17 tax-free amount and forms my current tax code, I just don't want to pay it twice.

Thank you
Jane

[Deleted User]

1) that is correct - it will be grossed up on the calculation and the tax taken off.

2) correct. On the annual allowance question - I don't suppose they do perhaps ask on the pensions forum?

3) You won't - if it is collected in 2016/17 the £400 will come off the 2015/16 calculation.

janeskips

OK thank you. I will ask on the annual allowance in the pensions forum.

Sorry, I don't understand the recommendation for the last point. Are you saying I should ignore it and pay it off through PAYE in 2016-17? Or that I should write in the 400 and then expect my 2016-17 tax code to change? I suppose both end being the same?

[Deleted User]

janeskips wrote: »

OK thank you. I will ask on the annual allowance in the pensions forum.

Sorry, I don't understand the recommendation for the last point. Are you saying I should ignore it and pay it off through PAYE in 2016-17? Or that I should write in the 400 and then expect my 2016-17 tax code to change? I suppose both end being the same?

You have your calculation for 2015/16. Let's say that you owe £500.
You enter £400 in the relevant box.
The amount that will be demanded will be £100 as £400 is already being collected through your 2016/17 tax code.

or

You have your calculation for 2015/16. Let's say that you owe £300.
You enter £400 in the relevant box.
The amount that will be demanded will be NIL and the £400 which is being collected through your 2016/17 tax code will be altered to £300.

(Bit of lazy cut and pasting there)

janeskips

So in your examples by adding the 400 in the 15-16 calculation, it is an acknowledgment that this is being paid off via the 16-17 code and this reduces the 15-16 tax due.

I presumed it would be the opposite. If I state I underpaid 400 in 15-16 then this 400 would be added to what was calculated as already owed.

Incidentally, overall I do not owe for 15-16 overall (even considering the 400 underpayment), HMRC owes me. The additional tax relief I'm due on my SIPP is significantly greater than the additional tax I owe on my savings interest.

Also, I think I see what has happened with the 400 underpayment. I had my tax code changed fairly late during 15-16, the tax free amount was reduced because I was anticipating much more savings. So, this 400 I "owe" is the missing additional tax estimated as due on savings interest estimated for 15-16 at the time.

janeskips

Second opinions welcome!

Dazed_and_confused

Do you have your last notice of tax coding for 2015:16?

If so does this show an estimated underpayment had been calculated for 2015:16 when your tax code was last changed for 2015:16?

Incidentally I have to disagree with purdyoaten2's post of 09-08-2016 8:34 AM as my understanding was that if you owed £300 without the underpayment entry then added in the £400 you would get a self assessment refund of £100 and the £400 underpayment would remain in your tax code for the remainder of this tax year.

The £1000 restriction is required to ensure £400 extra tax is paid (1000 reduction in tax code x 40% = £400 extra tax paid)

All this is of course based on the £400 being tax due for 2015:16 (per latest code for that year). If the £400 is actually a tax liability from an earlier year then that is totally different and it is not relevant to the tax return you are now completing but would be relevant for the next one (2016:17)

[Deleted User]

[QUOTE=Dazed and confused;7113827
Incidentally I have to disagree with purdyoaten2's post of 09-08-2016 8:34 AM as my understanding was that if you owed £300 without the underpayment entry then added in the £400 you would get a self assessment refund of £100 and the £400 underpayment would remain in your tax code for the remainder of this tax year.

The £1000 restriction is required to ensure £400 extra tax is paid (1000 reduction in tax code x 40% = £400 extra tax paid)

16:17)[/QUOTE]

I guess we will have to agree to disagree. In my brother in law's case - a 2014/15 underpayment was coded out in 2015/16 - £768.50. It transpired that he actually was due a repayment of £168. He received £168 and the underpayment was removed from his 2015/16.code. Maybe some 'current' HMRC employee will enlighten us!!

Dazed and confused - on first Led Zeppelin album?