Big amount on Self Assesement Tax Return

kaj0_0

ello.
Looking for small advice regarding SA tax return for 16/17/. First of all I completely forgot about sending my tax return before 31st Jan and received an e-mail few days ago reminding me about it.

I've been working as (self-employed) courier for a period of slightly over 3 months (1.11.2016 - 15.02.2017) after thatI decided that working long hours + no paid holiday is not really for me so before the end of February I went back to "normal" employment.

I quickly checked all the payment I've received while working as self-employed and get the total amount of £3445 of profit for that period after excluding expenses for fuel calculated by 0.45p x mileage rule excluding commuting to and from work.

According to calculations on HMRC website I'm due £1.653.35.

Estimated payment due by 31 January 2018

You must pay the total of any tax and class 4 NIC due for 2016-17 plus first payment on account due for 2017-18 by 31 January 2018.
2016-17 balancing payment £1,101.57

1st payment on account for 2017-18 due 31 January 2018
(Note: 2nd payment of £550.79 due 31 July 2018) £550.78

Total due by 31 January 2018 £1,652.35
This amount does not take into account any 2016-17 payments on account you may have already made

I was quite surprised to see such a big amount to pay for only £3445 of profit but then I realized that shortly after I went back to "normal" employment I received my payment of around £800 tax refund in March 2017.

Does my thinking sounds correct that HMRC claiming now that tax refund back?

Dazed_and_confused

That may be part of it but if you had paid the correct amount of tax on your employment (including the refund when you returned to PAYE) then the tax on £3445 would normally be between £689 and £1550.

Without you explaining exactly what you have entered on the return it's all guesswork. You could owe extra tax for some other reason (company benefits?) or have additional student loan or Child Benefit charge payments to make.

You need to give more detail for anyone to help explain what's happened.

Dazed_and_confused

One additional thought, you do realise don't you that you only owe £1,101.57 for the 2016:17 tax year?

2016-17 balancing payment £1,101.57

The rest is simply a payment towards your tax liability for 2017:18. If you don't think you will have as much to pay for 2017:18 you can ask HMRC to reduce these "payments on account" to whatever amount you think will be correct.

You need to be careful not to reduce them too much otherwise you get hit with interest charges.

glider3560

Can you post the full calculation (there's a link on the screen where you copied the above from). Then we can see exactly how HMRC arrived at that figure.

kaj0_0

Hi. Thanks for reply.
Here is preview of my tax return with all personal details edited out of course.
drive.google.com/file/d/1vhAFlKwQvVOqAUPvpAfhoE4aSYLgIfCy/view?usp=sharing
Full calculation page.
drive.google.com/file/d/1PtznCv0jbIzpi10e_4epJ5VsJGj8n8Pq/view?usp=sharing
Still don't understand why I need to paid £500 for 17-18 year when I was normally paying taxes since April 2017.

Pennywise

kaj0_0 wrote: »

Still don't understand why I need to paid £500 for 17-18 year when I was normally paying taxes since April 2017.

You don't. Just make an election on the return to reduce the payments on account to zero if you're happy that you're paying the right tax through your payroll for 17/18.

glider3560

It's simply a "payment on account", i.e. HMRC asking you to pay half the estimated tax due part way through the tax year, rather than months after the tax year. You can ask them to change this if your profit will be lower than previous years.

sheramber

If your self employment ceased Feb 2017 did you tick the box on the return to advise HMRC that you had ceased?

kaj0_0

sheramber wrote: »

If your self employment ceased Feb 2017 did you tick the box on the return to advise HMRC that you had ceased?

Yes, I corrected it on one of the tax return pages and it decreased slightly the amount for NI I'm due for 16/17.