investment bond - top slicing - tax due

JeffMason

Jeremy535897 said:

If you use HMRC's software and it throws up this underpayment, to avoid a demand for the tax you don't owe, presumably you will have to add it in the tax paid for the year section, and you will have to explain that is how you have dealt with it. Perhaps @purdeyoaten2 would comment. You need to get to the bottom of the £13.80.

HMRC approved software is here:
https://www.gov.uk/government/publications/self-assessment-commercial-software-suppliers/self-assessment-online-commercial-software-suppliers

Apologies, I'm getting a little confused now. I will have to add it to the tax paid for the year section? Add the £1356.80 they want to charge me to that section?

I don't understand the £13.80 issue, but would get refunded that if incorrect I assume?

Am I right in thinking there is little point trying any HMRC approved software, as it seems to be doing the same thing?

JeffMason

Dazed_and_C0nfused said:

If you aren't claiming any employment related expenses and your tax code continues to include these (assuming that's what the extra £60 tax code allowances actually is) then you will end up owing money each year so the simplest thing to do would be to ask HMRC to remove them from your code as soon as possible.

You can check the exact make up of your tax code on your Personal Tax Account.

I didn't know that I was on the wrong tax code. How do go about asking them to change it?

FYI - I just checked and I got a £15 refund for in November 2020, because I apparently paid too much tax for 6 April 2019 to 5 April 2020. Is that related? 

Also, I checked why and they said "You were not given enough tax relief on your job expenses. You were given tax relief on job expenses of £0, but the actual amount claimed was £24" - this might have been related to working from home during the pandemic, which I did from March 2020, all the way through to October 2021 when we were allowed back to university campuses. 

Dazed_and_C0nfused

You almost certainly owe £13.80 for two reasons,

1.  Most people on PAYE owe £1.80 at the end of the tax year as you receive more allowances than are usually due.  Typically tax code 1256L will include allowances of 12,560 but employers allow 12,569 by the end of the year.  You are now paying that extra £1.80 back.

2.  If your tax code included say job expenses of £60 but the expenses weren't actually due you will have paid £12 less tax than you should.  You are now having to pay that £12 back.

JeffMason

Further update -- on my HMRC account my tax code for April 21 to April 22 is 1263L, so different to the one I gave earlier which is from my P60

JeffMason

Dazed_and_C0nfused said:

You almost certainly owe £13.80 for two reasons,

1.  Most people on PAYE owe £1.80 at the end of the tax year as you receive more allowances than are usually due.  Typically tax code 1256L will include allowances of 12,560 but employers allow 12,569 by the end of the year.  You are now paying that extra £1.80 back.

2.  If your tax code included say job expenses of £60 but the expenses weren't actually due you will have paid £12 less tax than you should.  You are now having to pay that £12 back.

It does say it includes £60 job expenses. Is that what claiming "relief on expenses for working from home" is? I should add for 2020-21 as I was working from home the entire tax year.

Dazed_and_C0nfused

No, £60 is typically claimed for laundry of uniform/logo'd clothing.  Or could be industry specific.

Are you now saying you want to claim Covid-19 WFH expenses but haven't as yet included them on your return?

JeffMason

Dazed_and_C0nfused said:

No, £60 is typically claimed for laundry of uniform/logo'd clothing.  Or could be industry specific.

Are you now saying you want to claim Covid-19 WFH expenses but haven't as yet included them on your return?

Ok, I don't have a uniform or anything that could be similar to that.

Yes, I absolutely should claim WFH espenses. I worked from home - teaching via zoom in my living room - from March 2020, all the way through the last tax year and up until late September 2021. 

I just checked the MSE guide to doing this, but can't find the section on my self assessment form that they mention "Online returns: Fill in the box titled 'Other expenses and capital allowances' in the employment section."

Dazed_and_C0nfused

In that case you need to include the expenses (£312) on your return.  Assuming you weren't paid anything by your employer for WFH.

That will change the £13.80 owed to a refund.

You should still get your tax code corrected though to avoid owing tax from 2021:22 onwards.

JeffMason

Dazed_and_C0nfused said:

In that case you need to include the expenses (£312) on your return.  Assuming you weren't paid anything by your employer for WFH.

That will change the £13.80 owed to a refund.

You should still get your tax code corrected though to avoid owing tax from 2021:22 onwards.

I figured out where to put it, but why £312? I thought it was £6 per week?
(and no - they didn't pay me a thing for that)

EDIT - ignore the above question - I was adding this year and got £150, but yes last year would be the full 52 weeks.

And I'm still not sure why my tax code is incorrect, or why the code for this coming year seems to be different than last year.

This is all very confusing, but THANK YOU - it's starting to become clearer!

Dazed_and_C0nfused

2020:21 
Personal Allowance £12500 + Expenses £60 = tax code allowances £12560 = tax code 1256L

2021:22 
Personal Allowance £12570 + Expenses £60 = tax code allowances £12630 = tax code 1263L