Self assessment tax bill of 7k!!

DRS1

Did you compare your new tax coding notice with previous one to see what had changed?

HMRC are unlikely to have changed your code "for no reason".  If you would like people on here to explain the reason for the change you need to give them a bit more information.

There are boxes you can tick on the self assessment form for reducing your payments on account and for having any tax owed collected through PAYE.  Best to discuss that with your accountant.

mybestattempt

I, like @poseidon1, think it's time to get a new accountant.

The current accountant seems unable to explain the 2023/24 SA liability and has given incorrect advice about SIPP contributions.

@Elmroad82 seems to have been told the underpaid tax relates to an issue with his 2023/24 tax code but has no explanation from his accountant that any tax due relating to the £18k vested shares has been correctly accounted for in the SA return and to what extent it may contribute to the tax underpaid.

Also, no advice has been given about whether to reduce payments on account for the 2024/25 liability.

Elmroad82

poseidon1 said:

Elmroad82 said:

I asked earlier today if I could contribute to my 23/24 SIPP and my accountant said “You can pay into your sipp provided the terms allow and apply the amount to 23/24 year”. 

The 100-110k is after pension contributions as it’s taken at source. I’m on income protection insurance as I’m off sick. This covers a percent of my salary.  I have a car allowance. Can I claim fur car maintenance?

I’ve not submitted my 23/24 tax return. My accountant was calculating it and just informed me I have 7k to pay for 23/24 and an estimate of 6k next year. 

I’ve made no charitable gift contributions…

You originally mentioned 'vested shares' of £18k which put me in the mind of executive share options the excercise of which triggers an income tax liability on the difference between the grant price and market value on acquisition.  Was £18k the 'gain' on excercise of the option ( if indeed it was a discretionary executive share option), or the market value when you acquired? Did you keep the shares or sell soon after vesting?

If a substantial chunk of your £7k liabilty referenced the shares, and you have no expectation of the same occuring for 2024/25, then the £6k estimate for this tax year maybe significantly overblown and an application to reduce via your self asssment return should be lodged.

The fact that your 'retired' accountant has not given you a satisfactory reason for your substantial tax underpayment, would be a good enough reason ( in my view)  to find another 'actively' practicing tax accountant who can decipher the basis for your 2023/24  underpayment, and ensure you do not unnecessarily end up overpaying for 2024/25  for a tax event ( share option excercise) that did not in fact reoccur.

2023/24 largely seems ancient history, but the £7k 'interest' free loan you received for that year does not justify you making a similar £6k 'loan' back to the Exchequer. 

The 18k was the value of the shares (not the difference) - I was given the shares and they vested These appear to have been taxed correctly. The 7k that I owe seems to be from underpayment of my monthly income starting my a change in tax code in April-23. Therefore the 6k probably is correct for 24/35 as it’s affecting my monthly income. Owing to my complicated payslip I thought I was being taxed correctly.  

Is there anyway to reduce this bill? Or do HMRC allow monthly repayments as I’m on salary insurance having had a life changing diagnosis a few years back. 7k is a lot to payback at once. 

I’m going to call HMRC to understand more but my income has reduced, not increased since 22/23 so it baffles me as to why they’ve changed my tax code. 

If I found another accountant, are they able to review  the past 3 years self assessments and make changes in case mistakes were made?

Cheers

Elmroad82

mybestattempt said:

I, like @poseidon1, think it's time to get a new accountant.

The current accountant seems unable to explain the 2023/24 SA liability and has given incorrect advice about SIPP contributions.

@Elmroad82 seems to have been told the underpaid tax relates to an issue with his 2023/24 tax code but has no explanation from his accountant that any tax due relating to the £18k vested shares has been correctly accounted for in the SA return and to what extent it may contribute to the tax underpaid.

Also, no advice has been given about whether to reduce payments on account for the 2024/25 liability.

That is correct. The response was tye following..

“Yes for the 23/24 tax year you are being requested to pay 7k. This is due to the fact you have reduced personal allowance 

The 3k for 24/25 is payment on account but if your code number for 24/25 has increased then we can claim that it is being paid by coding from your employment”

Dazed_and_C0nfused

Elmroad82 said:

poseidon1 said:

Elmroad82 said:

I asked earlier today if I could contribute to my 23/24 SIPP and my accountant said “You can pay into your sipp provided the terms allow and apply the amount to 23/24 year”. 

The 100-110k is after pension contributions as it’s taken at source. I’m on income protection insurance as I’m off sick. This covers a percent of my salary.  I have a car allowance. Can I claim fur car maintenance?

I’ve not submitted my 23/24 tax return. My accountant was calculating it and just informed me I have 7k to pay for 23/24 and an estimate of 6k next year. 

I’ve made no charitable gift contributions…

You originally mentioned 'vested shares' of £18k which put me in the mind of executive share options the excercise of which triggers an income tax liability on the difference between the grant price and market value on acquisition.  Was £18k the 'gain' on excercise of the option ( if indeed it was a discretionary executive share option), or the market value when you acquired? Did you keep the shares or sell soon after vesting?

If a substantial chunk of your £7k liabilty referenced the shares, and you have no expectation of the same occuring for 2024/25, then the £6k estimate for this tax year maybe significantly overblown and an application to reduce via your self asssment return should be lodged.

The fact that your 'retired' accountant has not given you a satisfactory reason for your substantial tax underpayment, would be a good enough reason ( in my view)  to find another 'actively' practicing tax accountant who can decipher the basis for your 2023/24  underpayment, and ensure you do not unnecessarily end up overpaying for 2024/25  for a tax event ( share option excercise) that did not in fact reoccur.

2023/24 largely seems ancient history, but the £7k 'interest' free loan you received for that year does not justify you making a similar £6k 'loan' back to the Exchequer. 

The 18k was the value of the shares (not the difference) - I was given the shares and they vested These appear to have been taxed correctly. The 7k that I owe seems to be from underpayment of my monthly income starting my a change in tax code in April-23. Therefore the 6k probably is correct for 24/35 as it’s affecting my monthly income. Owing to my complicated payslip I thought I was being taxed correctly.  

Is there anyway to reduce this bill? Or do HMRC allow monthly repayments as I’m on salary insurance having had a life changing diagnosis a few years back. 7k is a lot to payback at once. 

I’m going to call HMRC to understand more but my income has reduced, not increased since 22/23 so it baffles me as to why they’ve changed my tax code. 

If I found another accountant, are they able to review  the past 3 years self assessments and make changes in case mistakes were made?

Cheers

Yes, HMRC may well allow time to pay a Self Assessment liability.

But to avoid a late payment penalty and only have to pay late payment interest you need to have filed your return and made the arrangement to pay by the end of February I think. 

If you don't do that you (and some tax is unpaid) you will be at high risk of a late payment penalty as well as late payment interest.

Pretty sure options for reducing the liability have already been discussed in some detail on this thread.

A new accountant (or you, or your existing one) can amend your 2022-23 return upto 31 January 2025.

The time limit for amending returns for years prior to 2022-23 has now passed however you can make claims for overpayment relief if you have a valid reason for doing so.

There is more detail here, specifically the If you've missed the deadline to change your return section 

https://www.gov.uk/self-assessment-tax-returns/corrections

Elmroad82

That’s great. Thanks. What’s the maximum that can be claimed for expenses? Is there any guidance in how to do this? I asked what items were claimed for  / how my accountant calculated filed expenses and got a vague answer of “we claimed for the allowable expenses”…
Any advice would be appreciated. I’ve looked online and can’t find any examples or amounts..

Dazed_and_C0nfused

Elmroad82 said:

That’s great. Thanks. What’s the maximum that can be claimed for expenses? Is there any guidance in how to do this? I asked what items were claimed for  / how my accountant calculated filed expenses and got a vague answer of “we claimed for the allowable expenses”…
Any advice would be appreciated. I’ve looked online and can’t find any examples or amounts..

The maximum is whatever your taxable earnings are (assuming you aren't self employed or in a partnership).

What expenses are you thinking of?  

Given you are responsible for your tax return and an accountant is essentially using the information you have provided them with then it seems odd you don't know what was included 🤔

Elmroad82

I’m PAYE. I assumed there were standard working from home allowances, Internet, electricity that are used for expenses?
I’ve also looked at my tax code and it’s not changed from 22-23 from 23-24. My taxable income has reduced by 40k yet HMRC want an additional 7k shortfall to be paid from 23-24. If my incomes reduced markedly, it doesn’t seem logical that HMRC would under tax me and then require an additional 7k when I’ve darby so much less than the prior year under the same tax code. Anyone know what 2665T tax code means?

sheramber

Is working from home in your contract?

If you choose to work from home you cannot claim any WFH expenses. 

Have you compared how your code was made up before the change and after the change. 

That would show you why it was changed. 

Elmroad82

I believe my contract contains working from home. 

There was no change in code. It remained the same (2665T) for both 22-23 and 23-24. The oddity is that I owe tax payments to HMRC now in 23-24 when my taxable income in my p60 is 40k less..nothing else has changed  ie I don’t have any additional income streams..