P11D Query

Sparta1983

Hi All,
I have had a P11D for the last few years due to having a company car and medical insurance. I have never had an issues with tax but this year i have been instructed to do a self assessment due to earning over a 100k. So when i have completed by self assessment and i add my p11d info it is now saying that i need to pay thousands in tax. My question is surely my P11D value has been taxed through my PAYE wages why as soon as i have to do a self assessment do i 'owe' the tax man money? None of my earnings are a surprise as they are all through PAYE and my P11d value has hardly changed.

Can anyone explain the reason for this?

Thanks in advance

Dazed_and_C0nfused

Sounds like the P11D is a red herring.

It will be the first tax year you will have lost some of your Personal Allowance due to having adjusted net income in excess of £100k.

There is often a large tax bill when this happens.

Your tax code probably included Personal Allowance of £12,500 but if this is reduced to say £5,000 due to your adjusted net income them you will owe additional tax on an extra £7,500 of taxable income.

It would be prudent to check your Personal tax Account and see if your tax code for the current tax year is as upto date as it can be i e. HMRC are using an accurate estimate of what you expect your taxable pay to be.

Sparta1983

Thanks for the reply dazed. This is what has confused me because my tax code for the 2019/20 tax year is is 106L(which i believe means my personal allowance is 1006 for that tax year, so surely they have already taken this is to account?

Jeremy535897

Sparta1983 said:

Thanks for the reply dazed. This is what has confused me because my tax code for the 2019/20 tax year is is 106L(which i believe means my personal allowance is 1006 for that tax year, so surely they have already taken this is to account?

1069 rather than 1006. That may be due to the benefits in kind. Look at what personal allowance your self assessment shows.

Dazed_and_C0nfused

Sparta1983 said:

Thanks for the reply dazed. This is what has confused me because my tax code for the 2019/20 tax year is is 106L(which i believe means my personal allowance is 1006 for that tax year, so surely they have already taken this is to account?

No, you are getting two totally different things mixed up.

Your tax code allowances (the 1060-1069) are made up of your Personal Allowance plus any adjustments needed and less any deductions such as company benefits.

106L could be (reduced) Personal Allowance of 1065.

But the 106L could also be Personal Allowance £12,500 less company benefits £11,435 = tax code allowances of 1065

Sparta1983

Dazed_and_C0nfused said:

Sparta1983 said:

Thanks for the reply dazed. This is what has confused me because my tax code for the 2019/20 tax year is is 106L(which i believe means my personal allowance is 1006 for that tax year, so surely they have already taken this is to account?

No, you are getting two totally different things mixed up.

Your tax code allowances (the 1060-1069) are made up of your Personal Allowance plus any adjustments needed and less any deductions such as company benefits.

106L could be (reduced) Personal Allowance of 1065.

But the 106L could also be Personal Allowance £12,500 less company benefits £11,435 = tax code allowances of 1065

So assuming my 106L tax code is saying that i have a personal allowance of 1065 does this not mean they have taken my company benefits into account throughout the year and hence i shouldnt be getting hit with a massive tax bill through my self assessment at the end of the year? 
apologies' if am going round in circles just trying to get my head round it

Jeremy it looks like my self assessment says i have no personal allowance as on the summary everything is taxed at either 20% or 40%

Thanks again for your replies

[Deleted User]

It may help to know that one loses £1 of personal allowance for every £2 of income over £100000. Effectively the marginal tax rate between 100000 and 125000 is 60%. You would have paid 40% and, therefore, you can see how the underpayment could stack up.

Dazed_and_C0nfused

So assuming my 106L tax code is saying that i have a personal allowance of 1065 does this not mean they have taken my company benefits into account throughout the year and hence i shouldnt be getting hit with a massive tax bill through my self assessment at the end of the year? 

I think you are making the wrong assumption.

Your tax code is likely to have included Personal Allowance of £12,500 (less company benefits giving tax code allowances of 1065).

Your actual adjusted net income is higher than HMRC estimated so you have lost all of the Personal Allowance provisionally allowed in your tax code.

Jeremy535897

Sparta1983 said:

Dazed_and_C0nfused said:

Sparta1983 said:

Thanks for the reply dazed. This is what has confused me because my tax code for the 2019/20 tax year is is 106L(which i believe means my personal allowance is 1006 for that tax year, so surely they have already taken this is to account?

No, you are getting two totally different things mixed up.

Your tax code allowances (the 1060-1069) are made up of your Personal Allowance plus any adjustments needed and less any deductions such as company benefits.

106L could be (reduced) Personal Allowance of 1065.

But the 106L could also be Personal Allowance £12,500 less company benefits £11,435 = tax code allowances of 1065

So assuming my 106L tax code is saying that i have a personal allowance of 1065 does this not mean they have taken my company benefits into account throughout the year and hence i shouldnt be getting hit with a massive tax bill through my self assessment at the end of the year? 
apologies' if am going round in circles just trying to get my head round it

Jeremy it looks like my self assessment says i have no personal allowance as on the summary everything is taxed at either 20% or 40%

Thanks again for your replies

As has been said above, it looks as if your code of 106L was £12,500 personal allowance less £11,435 benefits, but if your income including benefits exceeded £125,000, that should have been £0 personal allowance, meaning you owe tax at 40% on £12,500. Is the underpayment £5,000? (If your income including benefits was somewhere between £100,000 and £125,000, you will owe less.)

Sparta1983

Jeremy535897 said:

Sparta1983 said:

Dazed_and_C0nfused said:

Sparta1983 said:

Thanks for the reply dazed. This is what has confused me because my tax code for the 2019/20 tax year is is 106L(which i believe means my personal allowance is 1006 for that tax year, so surely they have already taken this is to account?

No, you are getting two totally different things mixed up.

Your tax code allowances (the 1060-1069) are made up of your Personal Allowance plus any adjustments needed and less any deductions such as company benefits.

106L could be (reduced) Personal Allowance of 1065.

But the 106L could also be Personal Allowance £12,500 less company benefits £11,435 = tax code allowances of 1065

So assuming my 106L tax code is saying that i have a personal allowance of 1065 does this not mean they have taken my company benefits into account throughout the year and hence i shouldnt be getting hit with a massive tax bill through my self assessment at the end of the year? 
apologies' if am going round in circles just trying to get my head round it

Jeremy it looks like my self assessment says i have no personal allowance as on the summary everything is taxed at either 20% or 40%

Thanks again for your replies

As has been said above, it looks as if your code of 106L was £12,500 personal allowance less £11,435 benefits, but if your income including benefits exceeded £125,000, that should have been £0 personal allowance, meaning you owe tax at 40% on £12,500. Is the underpayment £5,000? (If your income including benefits was somewhere between £100,000 and £125,000, you will owe less.)

Hi Jeremy, yes the under payment is around 5k. I assumed that the personal allowance that i lost due to my earnings over 100k would be taxed at 20% not 40% so that would explain a lot. Just to clarify is that the case?

Dazed_and_C0nfused

Sort of.  Loss of the Personal Allowance means you are paying 40% tax on the income previously not taxed from having the Personal Allowance in your tax code