Self assessment tax bill of 7k!!

TheSpectator

[Deleted User] said:

TheSpectator said:

Elmroad82 said:

TheSpectator said:

Elmroad82 said:

I’m not sure I understand. I paid 25k tax from my gross salary but based on calculations I should have paid 32k from my gross salary. HMRC won’t take the 7k from my gross salary as they normally would as they want it via bank transfer so paying HMRC from my take home net pay means I’m paying tax before I pay the 7k back?

So you want tax relief on your tax bill? 

That's new.

Isn’t income tax taken from gross salary?  If Id overpaid tax, I’d get a cheque from HMRC that’s a gross amount - I’m not taxed on it so doesn’t the same apply? What am I missing?

Say in your case your earnings were £100,000 and you paid £25k tax. Ignoring NIC your take home would be £75k. Because of your incorrect tax code you should have paid £32k taking home £68k. Paying £7k back puts you in the position you should have been no?

I tried that scenario earlier - didn’t seem to work!

Yes, my last attempt!

mybestattempt

Elmroad82 said:

TheSpectator said:

Elmroad82 said:

I’m not sure I understand. I paid 25k tax from my gross salary but based on calculations I should have paid 32k from my gross salary. HMRC won’t take the 7k from my gross salary as they normally would as they want it via bank transfer so paying HMRC from my take home net pay means I’m paying tax before I pay the 7k back?

So you want tax relief on your tax bill? 

That's new.

Isn’t income tax taken from gross salary?  If Id overpaid tax, I’d get a cheque from HMRC that’s a gross amount - I’m not taxed on it so doesn’t the same apply? What am I missing?

Perhaps look at it this way:

At 5 April 2024 you had incurred a debt of £7k for the tax year 2023/24 and you must pay it back by 31 January 2025 from your net income in the following tax year 2024/25.

How much do you think you should pay?

sheramber

Elmroad82 said:

Having spoken to HMRC I will need to pay the tax back.. let's say I owe 7k which would have originally been taken pre tax or £580 per month gross? If I have to pay this back I'll have to pay out of my salary which is £580 AFTER tax. Therefore is this now costing me at least £7000 + 20% tax? 8400?

No, you received your salary after tax plus an extra £580  each month. 

You  were die to receive   X after tax  but you received X+ £580 

To  only get X you need to  return £580. 
. 

Elmroad82

Thanks! Very much appreciate the advice…. And explaining the calculations.