Calculation Explanation

rob78

Hi,

I am doing my self assesment tax return for the first time.

I had a part side hustle profit of £1525 that I need to declare. I paid PAYE on my salary an dthis was the correct amount, and used my £1000 personal allowance on interest from savings.

Therefore I was simply expecting the figure that I would be asked to pay would be £305 (1525 x 20%). However the figure just come up as £24 owed. How can this be? I do not want to go to the trouble of declaring this and paying a figure that is clearly wrong. Please help! Thanks

Dazed_and_C0nfused

rob78 said:

Hi,

I am doing my self assesment tax return for the first time.

I had a part side hustle profit of £1525 that I need to declare. I paid PAYE on my salary an dthis was the correct amount, and used my £1000 personal allowance on interest from savings.

Therefore I was simply expecting the figure that I would be asked to pay would be £305 (1525 x 20%). However the figure just come up as £24 owed. How can this be? I do not want to go to the trouble of declaring this and paying a figure that is clearly wrong. Please help! Thanks

Tax is all about the detail.

I don't know what relevance the savings nil rate band (aka Personal Savings Allowance) has to what I presume is some self employment income?

Have you entered details one at a time, for example everything employment related (including tax deducted under PAYE) first then checking the calculation.  You might expect to owe ~£2 at that point.

Then add the self employment and check the calculation again.

But you really need to explain the full detail of heat you have entered to get the explanation you really want.

rob78

I haven't tried adding one at a time, I will. I dont understand why I will have to do it this way? I thought the £1000 nil personal allowance would indicate that I have already used my allowance, therefore I should pay full 20% tax on the £1525 from self employment - is that no correct?

Dazed_and_C0nfused

rob78 said:

I haven't tried adding one at a time, I will. I dont understand why I will have to do it this way? I thought the £1000 nil personal allowance would indicate that I have already used my allowance, therefore I should pay full 20% tax on the £1525 from self employment - is that no correct?

You don't have to do it that way, it just helps highlight where the difference to what you were expecting might be.

I just don't understand why you are connecting a nil rate band (aka Personal Savings Allowance) relevant for interest with your self employment income?

Or despite saying this do you really mean the trading allowance 🤔

£1000 personal allowance on interest from savings.

rob78

I thought that on top of your personal tax free allowance 12570 you could then have an additional 1000 tax free allowance. I thought if this allowance was used on 1000 of interest the that was used and you couldn't use it on self employment income?

Dazed_and_C0nfused

rob78 said:

I thought that on top of your personal tax free allowance 12570 you could then have an additional 1000 tax free allowance. I thought if this allowance was used on 1000 of interest the that was used and you couldn't use it on self employment income?

There are two extra "allowances", one for trading income, i.e. self employment, and one for property income.

The Personal Savings Allowance is actually a 0% tax band specifically for interest.

Unless you are going to say what you have entered on the return it's pointless anyone trying to help really.

rob78

41175 from employment

1525 Profit from self emp.

1250 from interest

43950 total income received

Minus 12570 personal allowance

31380 Total income on which tax is due

Basic rate

Nil rate x 0%

250 x 20% = 50

income tax due after allowances 6076

Tax paid from PAYE employee 5802

interest receved from uk banks 250

total tax deducted 6052

TOTAL INCOME TAX DUE £24.

This is eveything that has been put in.

Thanks

Isthisforreal99

Did you enter your interest in 'taxed interest' box instead of 'untaxed'?

Dazed_and_C0nfused

rob78 said:

41175 from employment

1525 Profit from self emp.

1250 from interest

43950 total income received

Minus 12570 personal allowance

31380 Total income on which tax is due

Basic rate

Nil rate x 0%

250 x 20% = 50

income tax due after allowances 6076

Tax paid from PAYE employee 5802

interest receved from uk banks 250

total tax deducted 6052

TOTAL INCOME TAX DUE £24.

This is eveything that has been put in.

Thanks

Why have you put the interest in the taxed interest section 🤔

rob78

It asked for it on the site. It did say voluntary. Even if it was zero can yourself my point about the tax owed should be more with the 1525 self employment profit added?

Dazed_and_C0nfused

rob78 said:

It asked for it on the site. It did say voluntary. Even if it was zero can yourself my point about the tax owed should be more with the 1525 self employment profit added?

Which organisation deducted £250 tax from your savings interest 🤔.

I don't think anything on a tax return is "voluntary", you either need to complete a box as it is relevant or you don't.

You have declared that you received £1,250 of taxed interest.  That is very unusual.  The overwhelming majority of people would have received £1,250 of untaxed interest.

Until you can explain that you will never ever get to the point you want to be.