Tax return - including pay from employment

GSTAR

I am filling in a tax return for the year 2017-2018.

During this period I was EMPLOYED up until 31/06/2017. Between 01/07/2017 and 05/04/2018 I was SELF-EMPLOYED.

For my employment, I was paid and taxed via PAYE. I have input these amounts in my tax return as follows:

- Pay before tax: £9224
- UK tax paid: £1212

For my self-employment, I have entered the following:

- Turnover: £33444
- Expenses: £1422

Now for some reason, it is adding up both of my employed and self-employed incomes to work out how much tax is due. But I have already paid tax and NI on my employment, so it does not make sense to include this amount.

So in other words, instead of:

Profit from self employment (£32022) - Personal allowance (£11500) = £20522

It is instead doing:

Pay from employment (£9224) + Profit from self-employment (£32022) = £41246
Total income (£41246) - Personal allowance (£11500) = £29746.

Unfortunately I don't have a P45/P60 from my employment so I have used the figures from my last payslip (Gross pay to date and Tax paid to date).

I must be doing something wrong here, can anyone advise?

antrobus

GSTAR wrote: »

...

Now for some reason, it is adding up both of my employed and self-employed incomes to work out how much tax is due. ...

That's the way it works.

GSTAR wrote: »

...
Pay from employment (£9224) + Profit from self-employment (£32022) = £41246
Total income (£41246) - Personal allowance (£11500) = £29746.

Looks about right.

So 20% of that is due, less the tax already paid of £1212.

00ec25

fundamental misunderstanding.
your tax return declares your total income for the year.

You are taxed on that total (less personal allowance) so in your case taxed on 29,746

from that tax due figure you then deduct any tax already paid (1212) so leaving the actual amount of tax you must now pay on submitting your tax return

GSTAR

I still don't get it. As I understand, I've paid £1212 tax on my employment income of £9224. So why am I now being re-taxed on this income?

Pennywise

GSTAR wrote: »

I still don't get it. As I understand, I've paid £1212 tax on my employment income of £9224. So why am I now being re-taxed on this income?

Because that's how it works. Your tax return and tax calculation is for the full tax year, not part of it. So ALL your taxable incomes sources are added up, tax is worked out on the total, and then tax you've already paid is deducted, leaving you with a figure of what is owed.

01afraser4

GSTAR wrote: »

I still don't get it. As I understand, I've paid £1212 tax on my employment income of £9224. So why am I now being re-taxed on this income?

You won't be re-taxed on this income as you will be given credit for the tax that has already been deducted through PAYE.

For example

Your total income is as follows:

Pay from PAYE employment - £9,224
Profit from Self Employment - £32,022

Total earnings = £41,246

Minus your personal allowance of £11,500 leaves total taxable earnings of £29,746

£29,746 @ 20% tax = £5,949.20

Of the £5,949.20 in tax due, you have already paid £1,212 through PAYE so the remaining £4,737.20 should be your balancing payment due 31/01/2019.

Edit Note: The balancing payment above will simply be the income tax aspect and won't include any Class 2 National Insurance or Class 4 National Insurance Contributions you will be due to pay on your Self Employed profits.

chrisbur

GSTAR wrote: »

For my employment, I was paid and taxed via PAYE. I have input these amounts in my tax return as follows:

- Pay before tax: £9224
- UK tax paid: £1212

So in other words, instead of:

Profit from self employment (£32022) - Personal allowance (£11500) = £20522

).I must be doing something wrong here, can anyone advise?

The tax paid on your PAYE earnings was calculated after giving you part of your personal allowance aprox £3165.
You have then put the full £11500 against your self employed earnings rather than the part left after PAYE ie 11500 - 3165

agrinnall

GSTAR wrote: »

I still don't get it. As I understand, I've paid £1212 tax on my employment income of £9224. So why am I now being re-taxed on this income?

It sounds like you haven't actually completed the return, because if you had you'd see in the calculations that the tax you have already paid has been deducted to give a figure that you still owe.

jayne_richardson

I was told that I don’t put the money I have paid tax on in the tax return form as they already have that on record. Tax return is to calculate how much tax you need to pay on your self employed earnings.

chrisbur

jayne_richardson wrote: »

I was told that I don’t put the money I have paid tax on in the tax return form as they already have that on record. Tax return is to calculate how much tax you need to pay on your self employed earnings.

You must put all taxable income on your self-assessment form.

Sibbers123

jayne_richardson wrote: »

I was told that I don’t put the money I have paid tax on in the tax return form as they already have that on record. Tax return is to calculate how much tax you need to pay on your self employed earnings.

This is a worryingly common misconception.

If you don't understand why all your income needs to go on your tax return, even if it has been taxed at source, you need an accountant to help you through the process.