P11D and Self-Assessment

norsefox

Just looking for some quick guidance.

I've completed SA for the last few years, as I have self-employment in addition to my main job.  I also make significant SIPP contributions as a HRT, which I increase every year.

This is the first full year I've had an EV, and won't have my P11D until July.  I can calculate the value given I know it's 2% against a purchase/retail/catalogue price of £36,940.  Can I just declare this on the SA now, or should I wait to receive the P11D so I can be 100% sure of its accuracy?

I'm in a net tax underpaid position, so no rush, but I prefer just to get all my admin done as soon as I can.

I received a P11D in July 2023, last year, but it was for a tiny amount since I received the EV in February 2023.  HMRC adjusted my tax code in July 2023 in receipt of that, but I presume that was only to account for tax adjustment for the period of February/March 2023?

For the new financial year 2024-2025, am I right in saying that none of my tax due for the EV is payable/calculated until I complete SA or the P11D is issued in 2025?

Sorry - I'm comfortable with the rest, but having some difficulty with P11Ds since it's entirely new to me.

MetaPhysical

I have an EV too as a company vehicle.
You need to wait until you get the P11D because otherwise your SA figures are provisional and you will need to go back to the return when you get your "formal" P11D liability.  Many are in the same boat - myself included.  I could do my SA right now if I'd got my P11D. By law, you must have received the P11D by the end of July.

Correct, last year your P11D would have been for the accrued EV benefit between Feb>April 5th. However, not sure why they didn't adjust your code to reflect the fact that you had the EV for tax year 2023-2024 as well?????

Correct, your tax code should reflect the fact that you have the EV - i.e. it will be 12570 - (0.02 * EV value) moving forward, in other words you pay the P11D liability monthly in your tax.

[Deleted User]

P11D deadline is 6th July - not the end of July

norsefox

MetaPhysical said:

I have an EV too as a company vehicle.
You need to wait until you get the P11D because otherwise your SA figures are provisional and you will need to go back to the return when you get your "formal" P11D liability.  Many are in the same boat - myself included.  I could do my SA right now if I'd got my P11D. By law, you must have received the P11D by the end of July.

Correct, last year your P11D would have been for the accrued EV benefit between Feb>April 5th. However, not sure why they didn't adjust your code to reflect the fact that you had the EV for tax year 2023-2024 as well?????

Correct, your tax code should reflect the fact that you have the EV - i.e. it will be 12570 - (0.02 * EV value) moving forward, in other words you pay the P11D liability monthly in your tax.

Thanks.  They reduced my tax code last year around the period of the P11D being issued, but since it increases every year due to my SIPP contributions I'm never too sure what my tax code actually should be.

They may have adjusted it forward with the EV for 2023-2024, but I can't be sure.

Is there a quick and easy method to calculate what pension contributions should do to your tax code?  My gross contributions (excluding employer) are ~£11k, all of which is well above the 40p rate (and indeed 42p/45p rate in Scotland).  

Is it approx half, given half is already claimed?  I.e. £11k gross contributions would result in a tax code (all other things being equal) of £12,570 + £5,500 = 1807L?

I have some small charitable contributions, so if the above is correct, it's approximately in line with my current code (which would also have the EV value against it)

[Deleted User]

Employer pension contributions have no impact whatsoever on your tax position. You don’t pay them - no relief due!

norsefox

[Deleted User] said:

Employer pension contributions have no impact whatsoever on your tax position. You don’t pay them - no relief due!

Yes - I asked the question noting I was excluding employer contributions.  My gross personal contributions including basic rate relief are £11k.

MetaPhysical

You only get relief on your contributions towards the pension, not on your employer's.  So if you put in 8000 and your employer puts in 6000 (avoiding NI for the purposes of this discussion), there will be a total of 16000 in your pot for that year - 8000 PLUS 2000 tax relief = 10000 PLUS 6000 from your employer.

If you pay that via salary sacrifice then YOUR 8000 is subtracted from your gross salary meaning that you don't have to pay NI on that 8000.  Crucially, neither does your employer which makes them a saving in their NI bill.  Many employers will therefore pass on some or even all of their NI saving into your pension pot as an employee benefit

The net of all of this is that a 60k max-out of the pensions tax free allowance may only actually have cost you 30k or even less on your bottom right number of your pay slip.  It's even better than that as well because this pension contribution will reduce your exposure to higher tax thresholds as well. 

MetaPhysical

[Deleted User] said:

P11D deadline is 6th July - not the end of July

Thank you for that clarification and correction.  I knew it was in July sometime.

norsefox

That's now two comments about employer's contributions - answering a question I haven't asked.  I'm not sure what's confusing people?

As I stated above - I make ~£11k of grossed up pension contributions to my SIPP and workplace pension through relief at source (excluding all employer contributions).

Is there a quick way of calculating what effect this has on your tax code?

Dazed_and_C0nfused

norsefox said:

That's now two comments about employer's contributions - answering a question I haven't asked.  I'm not sure what's confusing people?

As I stated above - I make ~£11k of grossed up pension contributions to my SIPP and workplace pension through relief at source (excluding all employer contributions).

Is there a quick way of calculating what effect this has on your tax code?

No.

For a lot of people it will have no impact whatsoever as there is often no personal tax saving from RAS contributions.

For people who are higher rate on their PAYE income before and after factoring in the contributions the tax code allowance for a gross contribution of £11,000 could well be £5,500.

Higher rate relief on £11,000 in a simple scenario could be £2,200.  A tax code allowance of 5,500 would save £2,200 (avoiding tax on 5,500 of taxable earnings @ 40% = 2,200).

But this is all immaterial when the tax year ends, it is only ever a provisional attempt to give some tax relief, the actual position will be established via your Self Assessment return.

norsefox

Dazed_and_C0nfused said:

norsefox said:

That's now two comments about employer's contributions - answering a question I haven't asked.  I'm not sure what's confusing people?

As I stated above - I make ~£11k of grossed up pension contributions to my SIPP and workplace pension through relief at source (excluding all employer contributions).

Is there a quick way of calculating what effect this has on your tax code?

No.

For a lot of people it will have no impact whatsoever as there is often no personal tax saving from RAS contributions.

For people who are higher rate on their PAYE income before and after factoring in the contributions the tax code allowance for a gross contribution of £11,000 could well be £5,500.

Higher rate relief on £11,000 in a simple scenario could be £2,200.  A tax code allowance of 5,500 would save £2,200 (avoiding tax on 5,500 of taxable earnings @ 40% = 2,200).

But this is all immaterial when the tax year ends, it is only ever a provisional attempt to give some tax relief, the actual position will be established via your Self Assessment return.

Yes - I'd assumed for my purposes the sleight of hand would work, but yes, not applicable to all.

Thanks for confirming.