Tax return 2017

alewin

robram2 wrote: »

Managed to do my return, but am a bit unsure about the new "bank interest" rules... I thought the first £1000/£500 of interest was tax free, but the HMRC calculation is showing it affecting my tax owed..

Or should I not have entered any uk bank interest below the £1000/£500 mark?

The personal savings allowance for basic rate tax payers is £1000, higher rate £500. You only need to declare any interest received more than that.

robram2

Ok, is there any reference that says I don't have to declare it? Surely the HMRC calculation should bear that in mind... as people may not know which band they are in "until" they enter all their incomings etc on the self assessment.

polymaff

robram2 wrote: »

Ok, is there any reference that says I don't have to declare it? Surely the HMRC calculation should bear that in mind... as people may not know which band they are in "until" they enter all their incomings etc on the self assessment.

As you've already 95% completed the online self-assessment, you might as well submit.

robram2 wrote: »

Managed to do my return, but am a bit unsure about the new "bank interest" rules... I thought the first £1000/£500 of interest was tax free, but the HMRC calculation is showing it affecting my tax owed.

Online self-assessment is just a tool, not a tutorial. Just plug in the data and let it calculate.

What is really needed is some indication that this year's HMRC c0ck-ups render the online self-assessment invalid. I've tried a client's data: £15,600 taxable non-savings plus some taxable savings and, as expected, the tax has been incorrectly calculated. If HMRC are going to knowingly leave c0ck-ups in their software they might at least screen the client data to see if the c0ck-ups will invalidate the calculation.

Except that they'd probably make a c0ck-up of that, too.

chrismac1

Really it beggars belief that when these numpties are screwing up the easy peasy stuff, our politicians are busy letting them loose on really challenging stuff like Making Tax Diabolical.

I really dread to think what a car crash it is going to be.

polymaff

chrismac1 wrote: »

Really it beggars belief that when these numpties are screwing up the easy peasy stuff, our politicians are busy letting them loose on really challenging stuff like Making Tax Diabolical.

I really dread to think what a car crash it is going to be.

Quite, although the one pre-populated field in the return I mentioned is correctly filled in this year. Progress of a sort - but all this is after 20+ iterations of what should be a very straightforward programming task.

Not sure that car-crash fits the magnitude and period of the forthcoming MTD disaster.

realaledrinker

Given that HMRC have placed all their contractors inside IR35 as of today, leading to mass walkouts, don't expect those gremlins to be fixed anytime soon:

http://www.contractoruk.com/news/0012968hmrc_puts_its_own_it_contractors_inside_ir35.html

Dazed_and_confused

robram2

All savings interest (things like ISA's excepted) is still taxable income and has to be declared on your tax return.

Their is no personal savings "allowance" in the normal sense but £1000 or £500 of savings interest is taxed at a rate of 0% in 2016:17, there's a few of us on here that like a challenge

If you post up the figures we can have a go at working out what's gone wrong, or not as the case may be.

This PSA rate band is quite complicated and some low earners won't even get it and some higher earners have unexpected consequences arising from it.

Dazed_and_confused

Polymaff

I've tried a client's data: £15,600 taxable non-savings plus some taxable savings and, as expected, the tax has been incorrectly calculated.

Can you post up the details to give an idea of what's going wrong?

robram2

Ok,


After inputting the following:


£8000 from salary
£500 from savings interest
£50,000 from dividends


it is still taxing me MORE than if I leave out the savings interest.


It seems that the £500 interest is eating out of part of my personal allowance of £11,000.


So it shows that Tax is due on £47,500 rather than £47,000.

Dazed_and_confused

The basic principle is that £500 will use some of your unused (after salary) personal allowance so that would leave 2500 allowances for the dividends so you would have 47500 taxable.

However you can choose to have the full 3000 spare allowances allocated to dividends which leaves 500 interest and 47000 dividends taxable which may generate a different amount of tax due.

How you go about this in practical terms online i don't know but the SA110 notes (gov.UK) for the manual self assessment calculation confirm this type of thing is possible,


Because it may be more beneficial for some customers to now have (some of) their deductions and
allowances from box A125 allocated against dividend income before savings income etc. The savings
income etc is at boxes A137 to A139 and at boxes A155 to A157. If it's more beneficial to move
deductions and allowances to dividends in the higher rate range to increase tax at the basic rate, but
reduce tax at the higher dividend rate this working sheet may not give the correct answer. Overwrite the
amounts in the middle column to deduct the reliefs and allowances in the way which will result in the
greatest reduction in your liability to Income Tax.