Self Assesment Help

slinkydonkey

So I rent out my house and I am also an iT Contractor ( the latter always through an umbrella company).

I am using Gosimpletax.com to try to help however it is not a simple as I thought..

I didn't start rentig my house out until April 2021 so I realise my Self Assesment is not due until Jan 2023

However before I go spending all my profilts I want to make sure I put aside and budget for the future tax bill.

From reading this Which? magazine guide: https://www.which.co.uk/money/tax/income-tax/tax-on-property-and-rental-income/how-rental-income-is-taxed-ayc3w9f6kxgz

It gives this example:

• You earn £40,000 a year from your job     ( is this example before or after tax?)
  
• You make £13,000 in profit from a rental property
• This tips you over the £50,270 threshold for higher-rate tax in 2021-22.
• You'll pay 40% on the £2,730 above this threshold

If I am using the go Simple tax website do I need to enter all my income i.e from my Job ( IT Contractor) even though I have already paid income Tax via PAYE via the umbrealla?

Shall all income be declared even if income tax has already been paied on it?

Cheers

Paul

[Deleted User]

Yes - how would you work out the total tax due from all sources if you didn’t enter all income? 

You will receive full credit for all tax paid at PAYE when your self assessment liability is calculated.

So it should be: £53000 income. 

12570 tax free. £37700 @20% = £7540. £2730 @40% = £1092.

Total due - £8632 less tax already paid at PAYE.

lisyloo

Yea it should be declared, but self assessment will also ask how much tax has already been paid, so it will only ask you to pay any extra tax owed.

have you considered putting anything into a pension.

if you do so you can benefit at least the 40% income tax.

if your umbrella company will salary sacrifice into your pension you might also save employees NI and possibly employers NI.
that makes it a fantastic deal although you should be aware that pension money is tied up until at least age 55 and possibly age 57 (rules change all the time).

slinkydonkey

lisyloo said:

Yea it should be declared, but self assessment will also ask how much tax has already been paid, so it will only ask you to pay any extra tax owed.

have you considered putting anything into a pension.

if you do so you can benefit at least the 40% income tax.

if your umbrella company will salary sacrifice into your pension you might also save employees NI and possibly employers NI.
that makes it a fantastic deal although you should be aware that pension money is tied up until at least age 55 and possibly age 57 (rules change all the time).

Thanks alot!  and yes when I get the chance I always make sure that I get enrolled into the goverment auto enrollment pension via the umbrella company.