HMRC tax self assessment - double counting?

mandsk

I've been asked to complete a tax self assessment for 20/21 by HMRC.
My personal tax code was already reduced by health insurance benefit I had, however the self assessment asks for any benefits from the P11D to be entered. When I look at the final calculation, the health insurance benefit has been added now to "total income received" and I now owe HMRC money - so in effect I am paying for the benefit twice.
Do I leave the P11D information off the form - or how do I explain that I have already paid for this through my reduced tax code?
Any help appreciated. Thank you 

razord

Your reduced tax code was likely for the previous year's underpay because of the benefit - this one will be for the period of the tax return.

FatherTireseus

Your tax code is just a way for HMRC to try to make sure you pay the right amount of tax, but it doesn’t guarantee that you will pay exactly the right amount of tax in a year.  What actually matters when calculating tax is your total income (including any savings interest, dividends on shares etc) and the financial value of any benefits received through employment.

You need to include the information on your P11d, HMRC will add up all the income and benefits, work out the tax due, compare it to the tax paid and then tell you you may be due a refund, or that you’ve paid the right amount of tax, or that you owe them.

If your financial situation is fairly simple, e.g. employed with some health insurance benefit but no other sources of income, hopefully your tax code will have meant you paid roughly the right amount of tax and don’t need to pay any more.

mandsk

razord said:

Your reduced tax code was likely for the previous year's underpay because of the benefit - this one will be for the period of the tax return.

OK thank you - I have had the same reduced tax code for a few years - and the benefit too?

mandsk

FatherTireseus said:

Your tax code is just a way for HMRC to try to make sure you pay the right amount of tax, but it doesn’t guarantee that you will pay exactly the right amount of tax in a year.  What actually matters when calculating tax is your total income (including any savings interest, dividends on shares etc) and the financial value of any benefits received through employment.

You need to include the information on your P11d, HMRC will add up all the income and benefits, work out the tax due, compare it to the tax paid and then tell you you may be due a refund, or that you’ve paid the right amount of tax, or that you owe them.

If your financial situation is fairly simple, e.g. employed with some health insurance benefit but no other sources of income, hopefully your tax code will have meant you paid roughly the right amount of tax and don’t need to pay any more.

That's helpful thankyou. My financial situation is simple, with no other sources of income, but I was made redundant and the final calculation is telling me I owe them quite a lot. Does what you've said mean - that even though the calculation on the form says I owe them money, HMRC will confirm any final amount before I need to pay them? Sorry for such specific questions....

Dazed_and_C0nfused

I think you are getting very confused.

Your tax code is provisional, it is your Self Assessment return which establishes your overall liability.

If you had taxable benefits from an employer then you need to include these on your return irrespective of whether they were included in your tax code or not.  Similarly you will include the tax deducted figure from your P60 (or P45).  This will reflect any additional tax deducted during the year as a result of the benefit in kind deduction in your tax code.

If you are owing tax unexpectedly then it's likely to be for one of two reasons, you have either made errors completing the return or the return is correct, you just haven't understood things fully.

Does what you've said mean - that even though the calculation on the form says I owe them money, HMRC will confirm any final amount before I need to pay them?

No.  I think you have failed to grasp the concept of Self Assessment.  If you aren't convinced the calculation is correct you will need to provide some more detail so people can help you understand either where you've gone wrong or why the liability is correct.

FatherTireseus

mandsk said:

That's helpful thankyou. My financial situation is simple, with no other sources of income, but I was made redundant and the final calculation is telling me I owe them quite a lot. Does what you've said mean - that even though the calculation on the form says I owe them money, HMRC will confirm any final amount before I need to pay them? Sorry for such specific questions....

When you say 'calculation on the form' do you mean your self assessment calculation (I'm assuming you're doing it online via the HRMC website)?

If your employer was deducting tax in line with your tax code from your salary before you were made redundant then I'm struggling to think of a reason why you might end up 'owing a lot of tax'.  

Are you entering your salary from your P60 / P45 along with the amount of tax you paid?  If you were made redundant, then the first £30k of redundancy payment is tax free, you aren't including that in your total income?

As Dazed_and_C0nfused says, we will need to see specific details to work out what's going on.

mandsk

FatherTireseus said:

mandsk said:

That's helpful thankyou. My financial situation is simple, with no other sources of income, but I was made redundant and the final calculation is telling me I owe them quite a lot. Does what you've said mean - that even though the calculation on the form says I owe them money, HMRC will confirm any final amount before I need to pay them? Sorry for such specific questions....

When you say 'calculation on the form' do you mean your self assessment calculation (I'm assuming you're doing it online via the HRMC website)?

If your employer was deducting tax in line with your tax code from your salary before you were made redundant then I'm struggling to think of a reason why you might end up 'owing a lot of tax'.  

Are you entering your salary from your P60 / P45 along with the amount of tax you paid?  If you were made redundant, then the first £30k of redundancy payment is tax free, you aren't including that in your total income?

As Dazed_and_C0nfused says, we will need to see specific details to work out what's going on.

Yes I'm completing on the HMRC website. I'm including info from my P45 (assessable pay and tax paid) and P11D (one entry). I haven't included the £30k tax free in total income, and my only other income is a dividend payment of a rather dismal £3, yet it says I owe c£2.5k. I think I'll have to phone HMRC. Thank you for your comments and suggestions, really appreciated.

FatherTireseus

mandsk said:

Yes I'm completing on the HMRC website. I'm including info from my P45 (assessable pay and tax paid) and P11D (one entry). I haven't included the £30k tax free in total income, and my only other income is a dividend payment of a rather dismal £3, yet it says I owe c£2.5k. I think I'll have to phone HMRC. Thank you for your comments and suggestions, really appreciated.

Hmmm, in that case the only thing I can think of is that your employer has somehow not been deducting the correct amount of tax from your salary, although if your tax code was correct they really ought to have got this right. £2,500 is rather a lot of money!  Let us know how you get on with HMRC.