Utilising last three years allowance

Dazed_and_confused

Where were you resident for tax purposes in 2018:19?

Assuming any other income such as rents, interest or dividends didn't take you back over £100k then it really depends on how much higher rate tax you were liable for in 2018:19.

It could be that you are due c£5.2k. But you could be a higher rate taxpayer and be due £0.

Did you have any other income not accounted for via your tax code? Or did you have estimated income or reliefs taken into account in your tax code which needs adjusting for the actual figures? Interest, dividends, Gift Aid etc?

And have you been asked to file a Self Assessment return for 2018:19?

BoxerfanUK

Dazed_and_confused wrote: »

Where were you resident for tax purposes in 2018:19?

Assuming any other income such as rents, interest or dividends didn't take you back over £100k then it really depends on how much higher rate tax you were liable for in 2018:19.

It could be that you are due c£5.2k. But you could be a higher rate taxpayer and be due £0.

Did you have any other income not accounted for via your tax code? Or did you have estimated income or reliefs taken into account in your tax code which needs adjusting for the actual figures? Interest, dividends, Gift Aid etc?

And have you been asked to file a Self Assessment return for 2018:19?

Salary including bonus £130,827.38
Salary sacrificed £40,088.95
BIK medical insurance £1,476.00
Tax code 1014T
UK resident, no other income or dividends, no gift aid, below threshold for savings interest.
Never been asked to file for SA

Dazed_and_confused

below threshold for savings interest

There is no threshold for interest. If the Personal Allowance has been used it will all be taxed. Some might be at 0% but that doesn't always mean it has no impact on the overall tax bill.

Was the P60 income about 90k?

Did anyone in the household receive Child Benefit?

The tax code having a T suffix suggests that the Personal Allowance might have been reduced in the expectation income would be over £100k.

Do you have the full breakdown of the tax code?

At face value there should be enough tax paid at 40% to get higher rate relief on the full contribution i.e. pay extra £26k basic rate tax and £26k less higher rate tax but there looks to be other adjustments which will need to be taken into account.

BoxerfanUK

P60 income £90,738.43

Not in receipt of CB

Tax code breakdown as stated in coding notice HMRC 03/18
personal allowance £11,625
less medical insurance£1,476
Total tax free amount £10,149
Tax code 1014T

Dazed_and_confused

There are a minimum of four things to be adjusted for then,

Full Personal Allowance of £11,850 seems to be due (c£90 refund)

Higher rate relief on the relief at source pension contribution (c£5.2k refund)

Adjustment for actual medical insurance benefit

Adjustment for tax owed due to how PAYE works (PAYE tax codes tend to leave most people owing a small amount each year and that will be taken into account when the calculation is done)

If interest is no more than £500 it will be taxed at 0% and in this situation won't add anything to the overall tax liability.

BoxerfanUK

D&C

So, the tax calculation letter and rebate received following HMRC's WRONG interpretation of the gross pension contribution following my letter to them claiming higher rate relief is as follows and includes an adjustment for the BIK originally estimated at £1,476.00 but actual was £1,591.00

Income £90,738.43 income tax £25,335.60
Medical insurance £1,591.00
Untaxed interest £34.00

Less personal allowance £11,850
total taxable income £80,513.43

Personal savings all' @ 0% INCOME £34.00 INCOME TAX £0
Basic rate @ 20% on INCOME £39,762.00 INCOME TAX £7,952.40
Higher rate @ 40% INCOME £40,717.00 INCOME TAX £16,286.80
TOTAL INCOME £80,513.00 INCOME TAX £24,239.20
Total tax payable £24,239.20
Tax you've already paid £25,335.60
HMRC owes you £1096.40

Page 3 Explanation ''Your actual private pension contribution'' £5,262.00

HIGHER RATE RELIEF
''We have increased the amount of tax you pay at basic rate from £34,500.00 to £39,672.00 to give you higher rate relief for pension contributions''

MEDICAL INSURANCE
Medical insurance you paid tax on £1,476.00
Your actual medical insurance £1,591.00

As said earlier, the gross pension contribution was £26,306.66 and not £5,262

BoxerfanUK

PS. Sorry to redmalc for sort of taking over your thread.

Dazed_and_confused

So three of the four things have now been corrected/taken into account in the first calculation.

The bit that needs to be changed is this,

Basic rate @ 20% on INCOME £39,762.00 INCOME TAX £7,952.40
Higher rate @ 40% INCOME £40,717.00 INCOME TAX £16,286.80

From what you've posted so far it should be more like this

Basic rate @ 20% on INCOME £60,806.00 INCOME TAX £12,161.20
Higher rate @ 40% INCOME £19,673.00 INCOME TAX £7,869.20

The total tax owed for 2018:19 is £20,030.40

Total tax paid was £25,335.60

Tax overpaid £5,305.20
Less tax already repaid £1096.40

Repayment due £4,208.80

BoxerfanUK

Dazed_and_confused wrote: »

So three of the four things have now been corrected/taken into account in the first calculation.

The bit that needs to be changed is this,

From what you've posted so far it should be more like this

Basic rate @ 20% on INCOME £60,806.00 INCOME TAX £12,161.20
Higher rate @ 40% INCOME £19,673.00 INCOME TAX £7,869.20

The total tax owed for 2018:19 is £20,030.40

Total tax paid was £25,335.60

Tax overpaid £5,305.20
Less tax already repaid £1096.40

Repayment due £4,208.80

Thanks for taking the time with all this D&C, yes based on the 'actual' contribution made those figures look more appealing, I just need to get HMRC to pay attention. :beer:

jamesd

redmalc wrote: »

Dazes and confused the bonus payment was additional to my salary of 108k

It's vital that you become familiar with the rules for the annual allowance taper if you aren't already. If your threshold income is even a penny over £110k you could have a large annual allowance charge to pay and this includes work benefits in kind and non-work taxable income like savings interest and dividends.

You're still allowed to carry forward unused (possibly also tapered) annual allowance from the last three tax years.