Self Assessment on PAYE

Samsonite1

I have to say that I am a bit confused by the whole self assessment system. I got a letter saying I had to register for an account with HMRC and do a self assessment. I had to research possible reasons, they did not offer a reason. Turns out it was due to earning over a certain amount.

As I am PAYE and have no other income, it was actually a bit odd to fill in the assessment, but I did and all I provided was gross income and tax paid, which it then decided I needed to pay more tax. Ok, so if I swallow that (i.e. my P60 apparently did not show enough tax payed through PAYE), I go to pay it... but you cannot pay by personal credit card, you have to have a corporate credit card?! I am not a business I am just a normal PAYE employee. At the top of the HMRC website when I try to pay says "Business Tax Account". Again, I am not a business.

I feel like there must be a mistake here - I want to pay the tax using a personal credit card, but the only possible option is to take it from my current account...

Dazed_and_confused

Being under PAYE and having to file a Self Assessment return is perfectly normal.

Often it is because you have income in excess of £100k or are caught by the High Income Child Benefit Charge.

you have to have a corporate credit card?!

That isn't true. You can pay by debit card. I think personal credit cards are no longer accepted because of the fees HMRC would have to pay. It was in the news last year (or the year before maybe). Not just HMRC it affected lots of credit card transactions and changing the way fees are charged.

Samsonite1

Thanks, it says corporate credit cards will have a fee too, so not sure why personal ones would make much difference. There is not much logic in forcing a self assessment if you reach that nice round number of 100k. What does it signify that PAYE is no longer sufficient? I suppose the answers are not important other than for my own sanity!

Dazed_and_confused

Once you go over £100k you start to lose some of your Personal Allowance (which means you have an effective tax rate of 60% (or more in Scotland) on some income).

HMRC need to know about all of your taxable income to know how much Personal Allowance you are entitled to and they can check this by getting you to file a tax return.

As a user of this website I would be quite surprised if your only taxable income was your salary.

Do you get interest or a reward from your bank account??

the only possible option is to take it from my current account

Samsonite1

I declared the huge amount of under £100 of interest although I thought that tax was deducted on that automatically.

As a user of this website, I just have a permanent job and a bank account, a massive mortgage to pay and 2 kids - the joys of living in London... on that note - given the cost of living here, the blanket tax rules do screw you somewhat.

Dazed_and_confused

Tax stopped being deducted from most interest payments in April 2016.

Samsonite1

Dazed_and_confused wrote: »

Tax stopped being deducted from most interest payments in April 2016.

I am sure there was a guidance note saying that it was usually taken automatically but you can get a statement from your bank. The information is really unhelpful for a first-timer to be honest.

And this I really do not get: It said that that pretty much all fields were optional, including income, tax, interest, etc. In fact, when I first attempted it, I left the tax field blank because I assumed that they knew how much tax I had paid and wanted to know the income. I got a really hefty tax estimate that time around, so re-did it with a bit more info in!

The good thing about it is that it prompted me to increase my pension contributions a great deal which I suppose is a positive.