?Another Self Assessment question - it's that time again!
Discussion
You didn't pay "Extra Tax".
What you paid were the two Self Assessment tax payments on account. In effect, you paid in advance part of your overall 2009/10 tax liability.
You do not need to make any entries on the 2009/10 tax return in respect of the 2009/10 Payments on Account you have already made.
When the 2009/10 tax return is completed, the system will work out your correct 2009/10 tax (and Class 4 NI liability if you are self employed). The payments you already made on account for 2009/10 will be automatically taken into account leaving you with the balance to pay on 31 January 2011 to clear your 2009/10 liability. If the 2009/210 Payments on Account were higher in total than the actual 2009/10 tax liability, you will be credited with the overpayment.
HOWEVER, you will also be asked to make 2010./11 Payments on Account - the first being part of the 31 January 2011 tax payment.
If the actual liability for 2009/10 is less than £2,000 - you will not be required to make any 2010/11 Payments on Account.
Simple, isn't it
What you paid were the two Self Assessment tax payments on account. In effect, you paid in advance part of your overall 2009/10 tax liability.
You do not need to make any entries on the 2009/10 tax return in respect of the 2009/10 Payments on Account you have already made.
When the 2009/10 tax return is completed, the system will work out your correct 2009/10 tax (and Class 4 NI liability if you are self employed). The payments you already made on account for 2009/10 will be automatically taken into account leaving you with the balance to pay on 31 January 2011 to clear your 2009/10 liability. If the 2009/210 Payments on Account were higher in total than the actual 2009/10 tax liability, you will be credited with the overpayment.
HOWEVER, you will also be asked to make 2010./11 Payments on Account - the first being part of the 31 January 2011 tax payment.
If the actual liability for 2009/10 is less than £2,000 - you will not be required to make any 2010/11 Payments on Account.
Simple, isn't it
Eric Mc said:
You didn't pay "Extra Tax".
What you paid were the two Self Assessment tax payments on account. In effect, you paid in advance part of your overall 2009/10 tax liability.
You do not need to make any entries on the 2009/10 tax return in respect of the 2009/10 Payments on Account you have already made.
When the 2009/10 tax return is completed, the system will work out your correct 2009/10 tax (and Class 4 NI liability if you are self employed). The payments you already made on account for 2009/10 will be automatically taken into account leaving you with the balance to pay on 31 January 2011 to clear your 2009/10 liability. If the 2009/10 Payments on Account were higher in total than the actual 2009/10 tax liability, you will be credited with the overpayment.
HOWEVER, you will also be asked to make 2010/11 Payments on Account - the first being part of the 31 January 2011 tax payment.
If the actual liability for 2009/10 is less than £2,000 - you will not be required to make any 2010/11 Payments on Account.
Simple, isn't it
Hi Eric, sadly to me it isn't simple but I do appreciate those who understand it. My full situation is as follows:What you paid were the two Self Assessment tax payments on account. In effect, you paid in advance part of your overall 2009/10 tax liability.
You do not need to make any entries on the 2009/10 tax return in respect of the 2009/10 Payments on Account you have already made.
When the 2009/10 tax return is completed, the system will work out your correct 2009/10 tax (and Class 4 NI liability if you are self employed). The payments you already made on account for 2009/10 will be automatically taken into account leaving you with the balance to pay on 31 January 2011 to clear your 2009/10 liability. If the 2009/10 Payments on Account were higher in total than the actual 2009/10 tax liability, you will be credited with the overpayment.
HOWEVER, you will also be asked to make 2010/11 Payments on Account - the first being part of the 31 January 2011 tax payment.
If the actual liability for 2009/10 is less than £2,000 - you will not be required to make any 2010/11 Payments on Account.
Simple, isn't it
Wife was working in 08/09 and ceased working in Apr 09 (so was paid 1 months salary in tax year 09/10 which I'm filing now). She also had rental property income in 08/09 which is why HMRC asked us to pay extra tax on account last year. She was not working after Apr 09 (lucky lady) but still has property income, so income is not too far over the personal allowance. For Tax year 09/10 she has therefore earned less than, say 10k, but has paid tax on account in the order of circa £800 for TY 09/10. In my mind she has therefore paid well over the tax due and should be due a refund (all other return items being pretty simple). Her tax code on her p45 is 647L if that makes any odds.
Does that change anything or am I just bitter at the Gov't for all the tax we have to pay?
The situation is exactly as I stated above. She made her two Payments on Account for 2009/10 in the normal way. It turns out they were excessive.
Complete the return in the normal way. This will generate her CORRECT tax liability for 2009/10 - which might even be Nil.
Once the return is submitted the correct 2009/10 liability will be logged and the amount she has overpaid should be refunded to her.
The only thing you need to do on the return is to make sure she ticks the "Claim a repayment" box. Otherwiose HMRC might hang onto the overpaid tax and just show it as a credit on her "Statement of Account".
For future reference - if you ever come across a situation like this again - be aware that you can apply to have Payments on Account reduced to a lower level (Nil if appropriate) if you know that the actual liability for a given tax year is going to be less than the originally calculated Payments on Account. You can make this application as part of the submission of the Self Assessment tax return or you can do it separately by using a special form called the "SA303 - Application to Reduce Payments on Account".
Complete the return in the normal way. This will generate her CORRECT tax liability for 2009/10 - which might even be Nil.
Once the return is submitted the correct 2009/10 liability will be logged and the amount she has overpaid should be refunded to her.
The only thing you need to do on the return is to make sure she ticks the "Claim a repayment" box. Otherwiose HMRC might hang onto the overpaid tax and just show it as a credit on her "Statement of Account".
For future reference - if you ever come across a situation like this again - be aware that you can apply to have Payments on Account reduced to a lower level (Nil if appropriate) if you know that the actual liability for a given tax year is going to be less than the originally calculated Payments on Account. You can make this application as part of the submission of the Self Assessment tax return or you can do it separately by using a special form called the "SA303 - Application to Reduce Payments on Account".
S6PNJ said:
Thanks again Eric, guess I'm just disappointed that I have to pay as much as I do! Boo Hoo!
I did apply to pay less on account and it was reduced from what HMRC calculated, I didn't realise it could be reduced all the way to zero though!
It can - if Zero is the correct liability.I did apply to pay less on account and it was reduced from what HMRC calculated, I didn't realise it could be reduced all the way to zero though!
It always baffles me why people do their own self assessments? An accountant will do it for you for a couple of hundred pounds. Chances are it will take you a few hours to do personally and you'll miss out on some potential tax savings. Use that few hours it would have taken you to work on and develop your own business instead. In my opinion doing them yourself is a false economy for the majority of people.
T84 said:
I have to do them because HMRC told me I had to and they can't reverse their decision 
The onus is actually on taxpayers to KNOW that they need to complete a return.Basically, anyone who has -
self employment income
rental income
a capital gain in the year
or is a higher rate taxpayer with some non-PAYE income which is only taxed at Basic Rate or the 10% investment tax rate e.g. dividends) really needs to complete self assessment tax returns.
They should not wait for HMRC to alert them to the fact that they should be completing tax returns.
Conversely, those with low levels of income (such as pensioners) often find it useful to complete Self Assessment returns as they nearly always end up getting a tax refund - which in many cases easilly exceeds the accountancy fee they might have paid.
Edited by Eric Mc on Sunday 23 January 15:22
Sideways Rich said:
How does one obtain a Self Assessment form? - I've been sent one to complete for the past 2 years but nothing this year, from the above I guess the onus is on me to still complete a return.
Thanks,
Rich
HMRC no longer sends out full blank tax returns. Thanks,
Rich
If they require you to submit a return, they send out a formal "Notice to Submit a Self Assessment Tax Return" - usually early in April just after the previous tax year has ended. This notice is in the form of a letter and is easily overlooked. It often gets sent to the last known address - which means that if you have changed address since the submission of the last return, you won't realise they are expecting another return. The best way to find out if they want you to submit one is to telephone them, quoting your UTR number (which was printed on the last return and any notices and correspondence you will have received).
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