Messy tax situation

Dazed_and_C0nfused

monaymadlol said:

Dazed_and_C0nfused said:

monaymadlol said:

Dazed_and_C0nfused said:

monaymadlol said:

Dazed_and_C0nfused said:

monaymadlol said:

Right, that's frustrating. Both my self employed and employed are in 20% bracket.

In my new starter I did tick the fact that I had other employment since April but that this was now my only job, so I don't know why I now have to combine or calculate tax liability for both earnings, it really should have been taxed at source by the employer, based on the information and tax code provided, perhaps using an estimate of previous returns if needed!

Will this be resolved after April then?!

I presume you are referring to statement B?

If so you would have to ask your employer why they ignored this and used code 0T.

With statement B they should have defaulted to the emergency tax code on a non cumulative basis, i.e. just looking at things pay day by day and not giving any allowances from the earlier part of the tax year.  Although HMRC might have still issued a cumulative code.

It will be resolved via your Self Assessment return.

Yes, statement B.

Ok, I was under the impression that 1257L was not an emergency tax code and that OT was.

So, if I submit a return next week, adding in relevant employment earnings, this will calculate a total self employed and employed liability for me to pay 31/7/24, and then generate a new tax code for payroll (how soon?), and everything will be adjusted (IE correct tax code, taxed at source) come the April paycheck? So I'll just need to ensure that I don't spend it and set aside 

This is an additional question which I may need to ask in a different section: I plan to keep my sole trader account open but not do any self employed work for the foreseeable future, will I need to submit further tax returns with my 23/24 balance soon to be calculated and cleared? Ie I won't be paying further tax self employed or doing any self assessment.

Your 2023-24 Self Assessment calculation will show the total tax due for the year taking into account all the taxable income you include on your return.

I don't know what adjustment you are expecting to your 2024-25 tax code but there won't be any that is related to your employment income from 2023-24.

Your employer will continue to use the 1257L code until something changes that.  That means the first £1,048/month won't have any tax deducted.  And the £1,048 is cumulated each month so by the end of the tax year you have had the benefit of all your tax code allowances.

Why do you think that that is wrong 🤔

If you file your return by 30 December you may have the option to pay any (Self Assessment) tax owed via your 2025-26 tax code.  But if you prefer for that not to happen and prefer to pay as normal with the January/July/January POA and Balancing Payment system then just make sure you complete the relevant question near the end of your return to prevent the tax from being in included in your tax code.

I'm referring to any adjustment for self employment rather than employment since I'm now fully employed going into 24/25.

I think the issue is, with no tax on the first £1048 per month is that surely my self assessment will have taken into consideration that tax allowance when calculating the remaining £1800 or so I owe (tbc) for 31/7/24 (balancing payment), so at what point is that amended to take into account my new employment status...as in I've been setting aside money for that £1800 but surely that amount will change now.

Hopefully when I complete and return the 22/24 return next week, I will get a clearer idea what I owe and that payroll can ensure I'm taxed at source with the correct code rather than putting aside money for the self assessment that I won't need to complete thereafter 

You cannot rewrite history.  Any tax that is owed for 2023-24 will form part of your 2023-24 Self Assessment calculation and that will be collected following the Self Assessment process. 

Your 2024-25 tax code will never be adjusted to take into account any tax owed from 2023-24.

And for the new tax year (2024-25) the correct tax code, based on what you have posted, is 1257L.  Which, unless HMRC send them a different code, is what they will use for your April pay.

What exactly do you think should be different from April onwards 🤔.

I thought you said that 1257L was an emergency ie temporary code, so I thought that would be changed once I submit my 23/24 return and sent to my employer to use 🤔

There seems to be a misunderstanding about the other point so I wouldn't worry - what I'm trying to say is - this will be my last self employed self assessment for the foreseeable future and I need to contact or find out from HMRC so that I don't submit or owe future self assessment self employed returns given I finished that work earlier this year

1257L is the emergency tax code. 

But it's also the same code most people below State Pension age have as well.

It's not a temporary code.  0T is more akin to a temporary code.  It can be long term for very high earners (£125k+) but is often used by employers when someone starts a new job and is replaced soon after.  As happened to you.

monaymadlol

Dazed_and_C0nfused said:

monaymadlol said:

Dazed_and_C0nfused said:

monaymadlol said:

Dazed_and_C0nfused said:

monaymadlol said:

Dazed_and_C0nfused said:

monaymadlol said:

Right, that's frustrating. Both my self employed and employed are in 20% bracket.

In my new starter I did tick the fact that I had other employment since April but that this was now my only job, so I don't know why I now have to combine or calculate tax liability for both earnings, it really should have been taxed at source by the employer, based on the information and tax code provided, perhaps using an estimate of previous returns if needed!

Will this be resolved after April then?!

I presume you are referring to statement B?

If so you would have to ask your employer why they ignored this and used code 0T.

With statement B they should have defaulted to the emergency tax code on a non cumulative basis, i.e. just looking at things pay day by day and not giving any allowances from the earlier part of the tax year.  Although HMRC might have still issued a cumulative code.

It will be resolved via your Self Assessment return.

Yes, statement B.

Ok, I was under the impression that 1257L was not an emergency tax code and that OT was.

So, if I submit a return next week, adding in relevant employment earnings, this will calculate a total self employed and employed liability for me to pay 31/7/24, and then generate a new tax code for payroll (how soon?), and everything will be adjusted (IE correct tax code, taxed at source) come the April paycheck? So I'll just need to ensure that I don't spend it and set aside 

This is an additional question which I may need to ask in a different section: I plan to keep my sole trader account open but not do any self employed work for the foreseeable future, will I need to submit further tax returns with my 23/24 balance soon to be calculated and cleared? Ie I won't be paying further tax self employed or doing any self assessment.

Your 2023-24 Self Assessment calculation will show the total tax due for the year taking into account all the taxable income you include on your return.

I don't know what adjustment you are expecting to your 2024-25 tax code but there won't be any that is related to your employment income from 2023-24.

Your employer will continue to use the 1257L code until something changes that.  That means the first £1,048/month won't have any tax deducted.  And the £1,048 is cumulated each month so by the end of the tax year you have had the benefit of all your tax code allowances.

Why do you think that that is wrong 🤔

If you file your return by 30 December you may have the option to pay any (Self Assessment) tax owed via your 2025-26 tax code.  But if you prefer for that not to happen and prefer to pay as normal with the January/July/January POA and Balancing Payment system then just make sure you complete the relevant question near the end of your return to prevent the tax from being in included in your tax code.

I'm referring to any adjustment for self employment rather than employment since I'm now fully employed going into 24/25.

I think the issue is, with no tax on the first £1048 per month is that surely my self assessment will have taken into consideration that tax allowance when calculating the remaining £1800 or so I owe (tbc) for 31/7/24 (balancing payment), so at what point is that amended to take into account my new employment status...as in I've been setting aside money for that £1800 but surely that amount will change now.

Hopefully when I complete and return the 22/24 return next week, I will get a clearer idea what I owe and that payroll can ensure I'm taxed at source with the correct code rather than putting aside money for the self assessment that I won't need to complete thereafter 

You cannot rewrite history.  Any tax that is owed for 2023-24 will form part of your 2023-24 Self Assessment calculation and that will be collected following the Self Assessment process. 

Your 2024-25 tax code will never be adjusted to take into account any tax owed from 2023-24.

And for the new tax year (2024-25) the correct tax code, based on what you have posted, is 1257L.  Which, unless HMRC send them a different code, is what they will use for your April pay.

What exactly do you think should be different from April onwards 🤔.

I thought you said that 1257L was an emergency ie temporary code, so I thought that would be changed once I submit my 23/24 return and sent to my employer to use 🤔

There seems to be a misunderstanding about the other point so I wouldn't worry - what I'm trying to say is - this will be my last self employed self assessment for the foreseeable future and I need to contact or find out from HMRC so that I don't submit or owe future self assessment self employed returns given I finished that work earlier this year

1257L is the emergency tax code. 

But it's also the same code most people below State Pension age have as well.

It's not a temporary code.  0T is more akin to a temporary code.  It can be long term for very high earners (£125k+) but is often used by employers when someone starts a new job and is replaced soon after.  As happened to you.

Dazed_and_C0nfused said:

monaymadlol said:

Dazed_and_C0nfused said:

monaymadlol said:

Dazed_and_C0nfused said:

monaymadlol said:

Dazed_and_C0nfused said:

monaymadlol said:

Right, that's frustrating. Both my self employed and employed are in 20% bracket.

In my new starter I did tick the fact that I had other employment since April but that this was now my only job, so I don't know why I now have to combine or calculate tax liability for both earnings, it really should have been taxed at source by the employer, based on the information and tax code provided, perhaps using an estimate of previous returns if needed!

Will this be resolved after April then?!

I presume you are referring to statement B?

If so you would have to ask your employer why they ignored this and used code 0T.

With statement B they should have defaulted to the emergency tax code on a non cumulative basis, i.e. just looking at things pay day by day and not giving any allowances from the earlier part of the tax year.  Although HMRC might have still issued a cumulative code.

It will be resolved via your Self Assessment return.

Yes, statement B.

Ok, I was under the impression that 1257L was not an emergency tax code and that OT was.

So, if I submit a return next week, adding in relevant employment earnings, this will calculate a total self employed and employed liability for me to pay 31/7/24, and then generate a new tax code for payroll (how soon?), and everything will be adjusted (IE correct tax code, taxed at source) come the April paycheck? So I'll just need to ensure that I don't spend it and set aside 

This is an additional question which I may need to ask in a different section: I plan to keep my sole trader account open but not do any self employed work for the foreseeable future, will I need to submit further tax returns with my 23/24 balance soon to be calculated and cleared? Ie I won't be paying further tax self employed or doing any self assessment.

Your 2023-24 Self Assessment calculation will show the total tax due for the year taking into account all the taxable income you include on your return.

I don't know what adjustment you are expecting to your 2024-25 tax code but there won't be any that is related to your employment income from 2023-24.

Your employer will continue to use the 1257L code until something changes that.  That means the first £1,048/month won't have any tax deducted.  And the £1,048 is cumulated each month so by the end of the tax year you have had the benefit of all your tax code allowances.

Why do you think that that is wrong 🤔

If you file your return by 30 December you may have the option to pay any (Self Assessment) tax owed via your 2025-26 tax code.  But if you prefer for that not to happen and prefer to pay as normal with the January/July/January POA and Balancing Payment system then just make sure you complete the relevant question near the end of your return to prevent the tax from being in included in your tax code.

I'm referring to any adjustment for self employment rather than employment since I'm now fully employed going into 24/25.

I think the issue is, with no tax on the first £1048 per month is that surely my self assessment will have taken into consideration that tax allowance when calculating the remaining £1800 or so I owe (tbc) for 31/7/24 (balancing payment), so at what point is that amended to take into account my new employment status...as in I've been setting aside money for that £1800 but surely that amount will change now.

Hopefully when I complete and return the 22/24 return next week, I will get a clearer idea what I owe and that payroll can ensure I'm taxed at source with the correct code rather than putting aside money for the self assessment that I won't need to complete thereafter 

You cannot rewrite history.  Any tax that is owed for 2023-24 will form part of your 2023-24 Self Assessment calculation and that will be collected following the Self Assessment process. 

Your 2024-25 tax code will never be adjusted to take into account any tax owed from 2023-24.

And for the new tax year (2024-25) the correct tax code, based on what you have posted, is 1257L.  Which, unless HMRC send them a different code, is what they will use for your April pay.

What exactly do you think should be different from April onwards 🤔.

I thought you said that 1257L was an emergency ie temporary code, so I thought that would be changed once I submit my 23/24 return and sent to my employer to use 🤔

There seems to be a misunderstanding about the other point so I wouldn't worry - what I'm trying to say is - this will be my last self employed self assessment for the foreseeable future and I need to contact or find out from HMRC so that I don't submit or owe future self assessment self employed returns given I finished that work earlier this year

1257L is the emergency tax code. 

But it's also the same code most people below State Pension age have as well.

It's not a temporary code.  0T is more akin to a temporary code.  It can be long term for very high earners (£125k+) but is often used by employers when someone starts a new job and is replaced soon after.  As happened to you.

Thanks..

Here's a twist - I reduced my payment on account for the tax year because I knew I was not going to be self employed for much longer and because my earnings self employed had dipped slightly...this wouldn't be an issue if I came to PAYE and was taxed at source straight away...but will it look like I mislead by reducing my POA to owing a lot more with my tax I'll now be due to owe in employment...ie will I get a fine or will they differentiate between the two stages of employment?!🤔

Dazed_and_C0nfused

monaymadlol said:

Dazed_and_C0nfused said:

monaymadlol said:

Dazed_and_C0nfused said:

monaymadlol said:

Dazed_and_C0nfused said:

monaymadlol said:

Dazed_and_C0nfused said:

monaymadlol said:

Right, that's frustrating. Both my self employed and employed are in 20% bracket.

In my new starter I did tick the fact that I had other employment since April but that this was now my only job, so I don't know why I now have to combine or calculate tax liability for both earnings, it really should have been taxed at source by the employer, based on the information and tax code provided, perhaps using an estimate of previous returns if needed!

Will this be resolved after April then?!

I presume you are referring to statement B?

If so you would have to ask your employer why they ignored this and used code 0T.

With statement B they should have defaulted to the emergency tax code on a non cumulative basis, i.e. just looking at things pay day by day and not giving any allowances from the earlier part of the tax year.  Although HMRC might have still issued a cumulative code.

It will be resolved via your Self Assessment return.

Yes, statement B.

Ok, I was under the impression that 1257L was not an emergency tax code and that OT was.

So, if I submit a return next week, adding in relevant employment earnings, this will calculate a total self employed and employed liability for me to pay 31/7/24, and then generate a new tax code for payroll (how soon?), and everything will be adjusted (IE correct tax code, taxed at source) come the April paycheck? So I'll just need to ensure that I don't spend it and set aside 

This is an additional question which I may need to ask in a different section: I plan to keep my sole trader account open but not do any self employed work for the foreseeable future, will I need to submit further tax returns with my 23/24 balance soon to be calculated and cleared? Ie I won't be paying further tax self employed or doing any self assessment.

Your 2023-24 Self Assessment calculation will show the total tax due for the year taking into account all the taxable income you include on your return.

I don't know what adjustment you are expecting to your 2024-25 tax code but there won't be any that is related to your employment income from 2023-24.

Your employer will continue to use the 1257L code until something changes that.  That means the first £1,048/month won't have any tax deducted.  And the £1,048 is cumulated each month so by the end of the tax year you have had the benefit of all your tax code allowances.

Why do you think that that is wrong 🤔

If you file your return by 30 December you may have the option to pay any (Self Assessment) tax owed via your 2025-26 tax code.  But if you prefer for that not to happen and prefer to pay as normal with the January/July/January POA and Balancing Payment system then just make sure you complete the relevant question near the end of your return to prevent the tax from being in included in your tax code.

I'm referring to any adjustment for self employment rather than employment since I'm now fully employed going into 24/25.

I think the issue is, with no tax on the first £1048 per month is that surely my self assessment will have taken into consideration that tax allowance when calculating the remaining £1800 or so I owe (tbc) for 31/7/24 (balancing payment), so at what point is that amended to take into account my new employment status...as in I've been setting aside money for that £1800 but surely that amount will change now.

Hopefully when I complete and return the 22/24 return next week, I will get a clearer idea what I owe and that payroll can ensure I'm taxed at source with the correct code rather than putting aside money for the self assessment that I won't need to complete thereafter 

You cannot rewrite history.  Any tax that is owed for 2023-24 will form part of your 2023-24 Self Assessment calculation and that will be collected following the Self Assessment process. 

Your 2024-25 tax code will never be adjusted to take into account any tax owed from 2023-24.

And for the new tax year (2024-25) the correct tax code, based on what you have posted, is 1257L.  Which, unless HMRC send them a different code, is what they will use for your April pay.

What exactly do you think should be different from April onwards 🤔.

I thought you said that 1257L was an emergency ie temporary code, so I thought that would be changed once I submit my 23/24 return and sent to my employer to use 🤔

There seems to be a misunderstanding about the other point so I wouldn't worry - what I'm trying to say is - this will be my last self employed self assessment for the foreseeable future and I need to contact or find out from HMRC so that I don't submit or owe future self assessment self employed returns given I finished that work earlier this year

1257L is the emergency tax code. 

But it's also the same code most people below State Pension age have as well.

It's not a temporary code.  0T is more akin to a temporary code.  It can be long term for very high earners (£125k+) but is often used by employers when someone starts a new job and is replaced soon after.  As happened to you.

Dazed_and_C0nfused said:

monaymadlol said:

Dazed_and_C0nfused said:

monaymadlol said:

Dazed_and_C0nfused said:

monaymadlol said:

Dazed_and_C0nfused said:

monaymadlol said:

Right, that's frustrating. Both my self employed and employed are in 20% bracket.

In my new starter I did tick the fact that I had other employment since April but that this was now my only job, so I don't know why I now have to combine or calculate tax liability for both earnings, it really should have been taxed at source by the employer, based on the information and tax code provided, perhaps using an estimate of previous returns if needed!

Will this be resolved after April then?!

I presume you are referring to statement B?

If so you would have to ask your employer why they ignored this and used code 0T.

With statement B they should have defaulted to the emergency tax code on a non cumulative basis, i.e. just looking at things pay day by day and not giving any allowances from the earlier part of the tax year.  Although HMRC might have still issued a cumulative code.

It will be resolved via your Self Assessment return.

Yes, statement B.

Ok, I was under the impression that 1257L was not an emergency tax code and that OT was.

So, if I submit a return next week, adding in relevant employment earnings, this will calculate a total self employed and employed liability for me to pay 31/7/24, and then generate a new tax code for payroll (how soon?), and everything will be adjusted (IE correct tax code, taxed at source) come the April paycheck? So I'll just need to ensure that I don't spend it and set aside 

This is an additional question which I may need to ask in a different section: I plan to keep my sole trader account open but not do any self employed work for the foreseeable future, will I need to submit further tax returns with my 23/24 balance soon to be calculated and cleared? Ie I won't be paying further tax self employed or doing any self assessment.

Your 2023-24 Self Assessment calculation will show the total tax due for the year taking into account all the taxable income you include on your return.

I don't know what adjustment you are expecting to your 2024-25 tax code but there won't be any that is related to your employment income from 2023-24.

Your employer will continue to use the 1257L code until something changes that.  That means the first £1,048/month won't have any tax deducted.  And the £1,048 is cumulated each month so by the end of the tax year you have had the benefit of all your tax code allowances.

Why do you think that that is wrong 🤔

If you file your return by 30 December you may have the option to pay any (Self Assessment) tax owed via your 2025-26 tax code.  But if you prefer for that not to happen and prefer to pay as normal with the January/July/January POA and Balancing Payment system then just make sure you complete the relevant question near the end of your return to prevent the tax from being in included in your tax code.

I'm referring to any adjustment for self employment rather than employment since I'm now fully employed going into 24/25.

I think the issue is, with no tax on the first £1048 per month is that surely my self assessment will have taken into consideration that tax allowance when calculating the remaining £1800 or so I owe (tbc) for 31/7/24 (balancing payment), so at what point is that amended to take into account my new employment status...as in I've been setting aside money for that £1800 but surely that amount will change now.

Hopefully when I complete and return the 22/24 return next week, I will get a clearer idea what I owe and that payroll can ensure I'm taxed at source with the correct code rather than putting aside money for the self assessment that I won't need to complete thereafter 

You cannot rewrite history.  Any tax that is owed for 2023-24 will form part of your 2023-24 Self Assessment calculation and that will be collected following the Self Assessment process. 

Your 2024-25 tax code will never be adjusted to take into account any tax owed from 2023-24.

And for the new tax year (2024-25) the correct tax code, based on what you have posted, is 1257L.  Which, unless HMRC send them a different code, is what they will use for your April pay.

What exactly do you think should be different from April onwards 🤔.

I thought you said that 1257L was an emergency ie temporary code, so I thought that would be changed once I submit my 23/24 return and sent to my employer to use 🤔

There seems to be a misunderstanding about the other point so I wouldn't worry - what I'm trying to say is - this will be my last self employed self assessment for the foreseeable future and I need to contact or find out from HMRC so that I don't submit or owe future self assessment self employed returns given I finished that work earlier this year

1257L is the emergency tax code. 

But it's also the same code most people below State Pension age have as well.

It's not a temporary code.  0T is more akin to a temporary code.  It can be long term for very high earners (£125k+) but is often used by employers when someone starts a new job and is replaced soon after.  As happened to you.

Thanks..

Here's a twist - I reduced my payment on account for the tax year because I knew I was not going to be self employed for much longer and because my earnings self employed had dipped slightly...this wouldn't be an issue if I came to PAYE and was taxed at source straight away...but will it look like I mislead by reducing my POA to owing a lot more with my tax I'll now be due to owe in employment...ie will I get a fine or will they differentiate between the two stages of employment?!🤔

You would only get a fine (penalty) if you didn't pay the tax due for 2023-24 by the end of February next year.

But you are likely to be charged interest on anything paid after the due date.

So say for example each POA for 2023-24 was originally £1,250.

You made a claim to reduce them to £500.

But when your return is filed they should actually be £800.

If you only paid £500 in January 2024 then you would be charged interest on the £300 from 1 February until it was paid.

Same for the July POA although obviously filing your return between April and July will ensure you know the correct figure to pay in July.

monaymadlol

Thanks ^

Quick question - I'm doing the return, and still pay into a personal pension as well as now work DB pension - in terms of tax relief - do I only include the pension contributions while I was self employed til earlier this year? Or right through til now being employed?

Dazed_and_C0nfused

monaymadlol said:

Thanks ^

Quick question - I'm doing the return, and still pay into a personal pension as well as now work DB pension - in terms of tax relief - do I only include the pension contributions while I was self employed til earlier this year? Or right through til now being employed?

You include any relief at source contributions (where the pension company adds 25% to your contribution).

When they were paid within the tax year isn't relevant.

monaymadlol

Sorry I mean do I calculate all pension contributions Inc the 25% relief for only the period I was self employed ie til Jan because I continued paying into the PP after this when becoming employed, for the purposes of the 23/24 self assessment...or as you say, include it all til April even when I became employed 

Dazed_and_C0nfused

monaymadlol said:

Sorry I mean do I calculate all pension contributions Inc the 25% relief for only the period I was self employed ie til Jan because I continued paying into the PP after this when becoming employed, for the purposes of the 23/24 self assessment...or as you say, include it all til April even when I became employed 

You include all relief at source contributions paid during the tax year the tax return relates to.

There is nowhere on a tax return to enter pension contributions whilst you were self employed.  Or employed.  

If you paid into a pension whilst employed you may need to include those as well, it depends on the method used.  If it was relief at source they go on your return.  If they were net pay or salary sacrifice you do not include them on your return.

monaymadlol

Dazed_and_C0nfused said:

monaymadlol said:

Sorry I mean do I calculate all pension contributions Inc the 25% relief for only the period I was self employed ie til Jan because I continued paying into the PP after this when becoming employed, for the purposes of the 23/24 self assessment...or as you say, include it all til April even when I became employed 

You include all relief at source contributions paid during the tax year the tax return relates to.

There is nowhere on a tax return to enter pension contributions whilst you were self employed.  Or employed.  

If you paid into a pension whilst employed you may need to include those as well, it depends on the method used.  If it was relief at source they go on your return.  If they were net pay or salary sacrifice you do not include them on your return.

Now that I have access to my bank interest for the tax year, I'm completing my return. Adding in my employment information on a section I've never used before - PAYE ref, income to state, income tax paid to date (assume NI left here - no box for it).

There is a part here that asks about overlap relief:

• sold or closed down your trade/business during the 6 April 2023 to 5 April 2024 tax year, and your basis period for this year does not start on 6 April

I did 'stop' my self employed work in Jan - haven't officially closed it but as before, I just want to leave it open - do I click yes or no do you think - for overlap relief or does it not apply here?

Thanks in advance 

monaymadlol

There's also a 'did your business cease trading after 5/4 but before 6/4' - I assume i tick yes - so as to not pay future self employed tax, future returns?

monaymadlol

Looks like I need to update the class 2 NI - I option to stop this for 24/25 as otherwise it's ongoing and re-open I commence self employment - didn't realise