Why Am I Still Asked To Pay More Tax Every Year?

yberllan

Every year since earning over £100k, I complete a Self Assessment Tax Form and every year when completing this online form I find that I have pay mo0re tax which can be between £2,500 and £3,500. During the year I pay tax every month based on the Tax Code given by HMRC. My Employee is paying Tax based on that code. So why when I get to Self Assessment, which includes not extra elements, i.e. plain cut Amount of Salary x and amount of Tax paid y am I been asked to pay more tax. 

eskbanker

What's your exact total annual taxable income and what tax code have you been assigned?

MattMattMattUK

yberllan said:

Every year since earning over £100k, I complete a Self Assessment Tax Form and every year when completing this online form I find that I have pay mo0re tax which can be between £2,500 and £3,500. During the year I pay tax every month based on the Tax Code given by HMRC. My Employee is paying Tax based on that code. So why when I get to Self Assessment, which includes not extra elements, i.e. plain cut Amount of Salary x and amount of Tax paid y am I been asked to pay more tax. 

What is your income, how much do you pay into a pension and what is your tax code? I would imagine your income is somewhat variable from year to year, potentially bonuses, pension contributions etc, that variance is likely what causes the changes. 

yberllan

So while Bonus payments in my salary are included in the tax calculation for that month, i.e. I pay tax on the bonus payment, are you saying that I may still have to pay more tax ? 
My Final Tax Code was C812T W1/M1 which I be honest I do not understand. Pay was 134450.45. I do pay contribution to a Pension every month via my employee into a Pensions scheme provided by my employee. 

Dazed_and_C0nfused

yberllan said:

So while Bonus payments in my salary are included in the tax calculation for that month, i.e. I pay tax on the bonus payment, are you saying that I may still have to pay more tax ? 
My Final Tax Code was C812T W1/M1 which I be honest I do not understand. Pay was 134450.45. I do pay contribution to a Pension every month via my employee into a Pensions scheme provided by my employee. 

You might find life easier (going forward) if you updated your estimated taxable earnings on your Personal Tax Account.

If you start with position that you are not entitled to any Personal Allowance then if it turns out you are a really due some you shouldn't have such large underpayments.

QrizB

Also, do you have any other income that's paid gross? Savings, investments, that sort of thing?

Veteransaver

Could be the loss of child benefit? Do  you or your wife/partner claim it?

yberllan

No Child Benefit and no savings or investments. 

BoGoF

How is your tax code of C812T made up (your personal tax account should show this). The C at the start signifies that you are Welsh resident by the way.

When you say your pay was £134k, is this before your pension contributions? Do you know what type of scheme it is - are the payments deducted from income before tax or after?

On a taxable income of £134k then you would not be entitled to any personal allowance but the tax code suggests you were getting some. But this could be because of your pension contributions reducing your adjusted income.

yberllan

Yes it is before Pension contributions, which the self assessment form is telling me I do not need to add. 

Dazed_and_C0nfused

yberllan said:

Yes it is before Pension contributions, which the self assessment form is telling me I do not need to add. 

You only include pension contributions when one of the three common methods used to contribute applies.

If you use RAS you should include them.  Salary sacrifice and net pay contributions don't get included.