2017-2018 Tax return self assessment

Admiral_Allstar

Hi
I am attempting to submit my first online tax self-assessment but wish to check my numbers with you as I think I have done something wrong.
I think all the pertinent details are:

Salary after pension salary sacrifice £51,274.36
Medical Insurance benefit £379.00
50% of Interest from joint accounts £1.49 (no tax deducted)
Interest from PPI Claims £1,586.00 (tax deducted off this amount £317.20)
Pension Contributions £1,500 (£1,200 plus tax relief £300)
Child Benefit Received £1,076.40
Higher Rate Child Benefit Charge £182.00
Tax already paid from employment £9,265.54
Tax from PPI Claim interest above £317.20

2017-2018 Tax codes from payslips
Apr to Jul 2017 1150L
Aug 17 to Mar 18 1127L M1
2018-2019 Tax codes from payslips
Apr to Jun 2018 1150L
Jul to Dec 2018 1122L M1

I do have tax code notices but I think I am missing one for 2018-2019.

Tax code notices I have:
2017-2018 year has:
Personal Allowance £11,500
Less medical insurance £170
Less adjustment for estimated tax £60
Tax free amount £11,270

Thus giving tax code 1127L X replacing 1150L

Total tax free amount £11,270
Estimated tax I owe (this year) £17.20

2018-2019 year has:
Personal Allowance £11,850
Less medical insurance £170
Less adjustment for tax you owe (earlier year) £179
Total tax free amount £11,501
Tax code 1150L

Online on my tax account the tax code is: (but I don’t have the notice for this in paper copy)
Tax code 1129L
Personal Allowance £11,850
Underpayment from previous year £179
Less medical insurance £379
Total tax free amount £11,292


My question is…I don’t think I owe any tax for year 2017-2018 but online is saying I owe £77.40.

Can anyone advise? Apologies for the long post but I wanted to ensure I got everything possible to assist. That said I think the missing notification for 2018-2019 might be necessary.

Many thanks in advance.

Dazed_and_confused

Why don't you think you owe any tax on the interest?

Or the medical benefit?

Admiral_Allstar

Hi Thanks for the reply.

I don't think that at all. My calculations are:

Income
Salary £51,274.36
Medical Insurance £379.00
Interest £1,587.49

Total Income £53,240.85

Less Pension Contribution -£1,500 (incl. tax relief)
Taxable Income £51,740.85

Tax Payable:
First £11,500 £nil
Next £33,500 @ 20% £6,700.00
Remaining £6,740.85 @ 40% £2,696.34
Total Tax Due £9,396.34
+Higher Rate Child Benefit Charge £182.00
-Savings Interest Allowance £500 @ 40% -£200.00
-Tax Paid via salary -£9,265.54
-Tax Paid via PPI claim interest -£317.20
TAX TO BE REFUNDED £204.40

However, when I have completed the self-assessment online it states I owe £77.40

Regards

Dazed_and_confused

SIPP contributions do not reduce your taxable income.

They reduce your "adjusted net income", which is used to calculate the High Income Child Benefit Charge.

For income tax purposes a SIPP contribution will increase your basic rate band, in turn reducing income which might be liable to higher rate tax.

In your example you are effectively crediting yourself with 40% relief for the SIPP when only 20% is due (£1,500 taxed at 20% instead of 40%).

Admiral_Allstar

Hi Dazed and Confused. Sorry, I dont undertand your post.

For reference, whilst most of my pension contributions are made via salary sacrifice (and I have not included them in the above) the £1500 I do refer to is a one off contribution I made into my Company's pensions scheme, not a SIPP (£1200 plus tax relief of £300 = £1500). From all other posts I have read on this site I thought pension contributions were one way of reducing your taxable income and also your exposure to the higher rate child benefit charge.

Do I take it that the £77.40 is correct? I am unsure as there was a section in the online form asking about tax code notices and I dont think I did that bit correctly.

Regards

Dazed_and_confused

Pension contributions which have tax relief at source do not reduce your taxable income.

Any additional tax relief due (over and above the 20% relief added by the pension company) is given by the amount of basic rate tax payable being extended by the gross amount of pension contribution made, £1,500 in your example.

They do however reduce your "adjusted net income" which is the basis for calculating the High Income Child Benefit Charge.

I think you are getting confused between the two elements of your Self Assessment calculation.

The £1,500 has reduced the High Income Child Benefit Charge.

The £1,500 has reduced the amount of higher rate tax (40% outside Scotland) you have to pay. You have to pay an extra £1,500 at basic rate (20%) instead.

So the £1,500 has saved you £300 in income tax and around £160 in High Income Child Benefit Charge.

And you have £1,500 in your pension fund. Not a bad return for your initial £1,200 outlay.

It might make things easier for you to understand if you looked at your Self Assessment calculation without the pension contribution and compared it to the calculation with the pension contribution included.

Admiral_Allstar

Hi

Many thanks for your help and apologies for being away for a few days (I have been busy at work). I had a re-look and see what you mean about the pension. I also realised that the values for the previous year were incorrect and having corrected them I see I do actually owe some (although not the £77.40).

Makes me realise I need to plan a bit better this year to ensure I don't get stung on the Child Benefit Higher Rate Charge.