PAYE and self-assesment

[Puggit]

For the 2nd year running I have filled out my self-assesment online to find myself presented with a 4 figure tax bill. I'm required to fill out SA as previously we have rented out a house in France, otherwise I have no other income apart from via PAYE.

For 2011-2012 we have no income to declare in France. 2011-2012 I've been presented with a bill of approx £2500 based purely on my employment. I understand that for bills of under £3000, the extra tax can be collected via my tax code, but I'm being asked for the £2500 by the 31st January. What do I have to do to get HMRC to collect this over the year via my tax-code? I've already selected the option online to collect via my tax-code, but it still asks for the money by 31st Jan.

Is it as simple as ringing them up?

Thanks!

[sumo69]

As long as your return was filed online by 31/12 and you ticked the box for any underpayment to be coded out (to the 2013/14 tax year) then you should receive the tax calculation showing the liabilty and a coding for 2013/14 will follow - a call to confirm should allay any concerns.

David

[Eric Mc]

Your PAYE coding is obviously "up the spout" to use a technical expression.

Why is the PAYE system consistently under-collecting tax from your salary?

I would get to the bottom of this as otherwise you will keep having this problem.

Also, if you are taxed mainly under PAYE, it is even more advisable to submit Self Assessment tax returns soon after the tax year end because then you can get the current year's coding amended for previous tax year under or over-payments.

As it is, you will probably end up with a tax underpayment for 11/12 being adjusted in your 2013/14 tax coding.

[Puggit]

sumo69 said:

As long as your return was filed online by 31/12 and you ticked the box for any underpayment to be coded out (to the 2013/14 tax year) then you should receive the tax calculation showing the liabilty and a coding for 2013/14 will follow - a call to confirm should allay any concerns.

David

Thanks David - that date is a bloody well hidden little snippet

[Puggit]

Having spoken to them, it's clear that my tax-code was based on the previous year's earnings, and in my sales related role 2011/2012 was a bumper year which means my tax-free allowance was 0, so my tax code (554L) was wrong

Of course, they'll now give me a zero tax free allowance, and last year's earnings were significantly slimmer

[Eric Mc]

Why can't they give you the proper code relevant to your current situation?

For those under PAYE - monitor your codes and get themn changed as soon as you realise that it might not be right.

[Puggit]

Eric Mc said:

Why can't they give you the proper code relevant to your current situation?

For those under PAYE - monitor your codes and get themn changed as soon as you realise that it might not be right.

I work in sales, with the sales year ending in December (so comms for December paid in Feb). I had a bumper year towards the end and my pay rocketed, with accelerators all being paid in that final month, taking me above the threshold where the tax-free allowance reduces.

I had no idea about the tax free allowance reducing over that threshold because it had never applied to me before!

[anonymous-user]

Puggit said:

I work in sales, with the sales year ending in December (so comms for December paid in Feb). I had a bumper year towards the end and my pay rocketed, with accelerators all being paid in that final month, taking me above the threshold where the tax-free allowance reduces.

I had no idea about the tax free allowance reducing over that threshold because it had never applied to me before!

Welcome to my world ! I got an extra £3500 bill this year.

This loss of the tax free allowance is actually worse than I imagined.
I assumed that you would just lose out the 20% tax for the tax free allowance of £8.2k but actually you get shafted for 40%.
Its only going to get worse as the tax free allowance rises to £10k in the next couple of years. Effectively we'll be £4k out of pocket.

I'm so fed up with this country. Might be time to move back to the US.

[Puggit]

It creates an effective (and immoral) 60% income tax rate for the first 16k or so over 100k.

[Puggit]

Bandit said:

I'm so fed up with this country. Might be time to move back to the US.

I'm now actively researching tax avoidance methods - so well done HM's Government...

Here's an interesting one: http://moneytothemasses.com/readers-question-i-ear... - just suggesting it to HR.

[anonymous-user]

I'm planning on dumping anything I earn over £100k into my pension this year.
This should get a 20% uplift in my pension contribution from HMRC + a 20% return of tax on those pension contributions as well as the return of my tax free allowance.

I wouldn't normally want to put this much into my pension and this will cost the HMRC much more than if they didn't put me in this position in the first place.... but hey ho.

[sumo69]

Management of taxable income when earnings are exceeding £100k is one of the growing bits of my business - though it needs the client to be willing to invest or donate and have a decent IFA running alongside to action any choices at short notice.

Luckily I do.

David

[anonymous-user]

sumo69 said:

Management of taxable income when earnings are exceeding £100k is one of the growing bits of my business - though it needs the client to be willing to invest or donate and have a decent IFA running alongside to action any choices at short notice.

Luckily I do.

David

Hi David,

Any luck figuring out my Restricted Stock Units treatment puzzle?
I guess you will be busy till end of Jan so no rush.

Cheers

[sumo69]

Yes - I was waiting to hear from you!!

Lets touch base later this week.

David

[Puggit]

I'll be a couple of thousand over this year - so it's all going in to my pension.

Already pulled my money out of premium bonds and started collating the data for pension tax relief.