Tax return - made a loss but I owe them money???
Discussion
I hope someone can help me with this. I'm filling out my online tax return for 09/10 and the final calculation before submission is that I owe them £129.00.
Allow me to add some info. Figures are real to help any 'off the cuff' opinions
I was employed by a company up to 11/06/2009, I was made redundant and my final payslip came to £7200 inc redundancy payment.
My employed wage total inc the above came to £9273 of which £1771 was taken in tax etc
Claimed JSA for a while, total £532
Started as a sole trader and made a £450 loss by April 2010
Haven't received any other income at all.
I was really hoping to get some kind of tax refund, and can't understand how after making a loss I owe this amount.
I'll give the helpline a ring tomorrow but any opinions would be welcome.
Allow me to add some info. Figures are real to help any 'off the cuff' opinions
I was employed by a company up to 11/06/2009, I was made redundant and my final payslip came to £7200 inc redundancy payment.
My employed wage total inc the above came to £9273 of which £1771 was taken in tax etc
Claimed JSA for a while, total £532
Started as a sole trader and made a £450 loss by April 2010
Haven't received any other income at all.
I was really hoping to get some kind of tax refund, and can't understand how after making a loss I owe this amount.
I'll give the helpline a ring tomorrow but any opinions would be welcome.
I entered the total amount earned in the appropriate box then the amount of tax paid below. The £7200 was entered as a redundancy payment, this was the total from my last payslip (which I don't have anymore) and included week in hand / accrued holiday etc etc.
I could try to ring my old employer and see if they still have my payslip on file from 11/06/09
I could try to ring my old employer and see if they still have my payslip on file from 11/06/09
Eric Mc said:
What was on your P60 and/or P45?
How have you handled the loss in the tax return i.e. what type of loss relief are you claiming?
Loss relief - not sure on that one ( I will be using an accountant for this next year !)How have you handled the loss in the tax return i.e. what type of loss relief are you claiming?
Edited by Eric Mc on Thursday 27th January 11:47
The online tax return calculated a £450 loss for the self employment section, I ticked the box to have it paid to my bank account.
Do I need to pay some of next years tax now??
Edited by Mark34bn on Thursday 27th January 12:58 - deleted figures
Edited by Mark34bn on Thursday 27th January 19:56
I'm not going to do your sums for you. However, losses from self employment can be used in a number of different ways. You must ELECT to decide what YOU want to do with them. The choices are -
carry the loss forward for offset against future profits from the same trade only
carry the loss sideways in the tax year the loss was incurred (i.e. 2009/10) for offset against other income - such as salary taxed under the PAYE system.
If your loss was £450, carying it sideways against your salaried income should result in a tax reduction of £90 (£450 @ 20%)
HMRC don't refund actual business losses. They only offset the losses to allow you to reduce your overall tax bill.
carry the loss forward for offset against future profits from the same trade only
carry the loss sideways in the tax year the loss was incurred (i.e. 2009/10) for offset against other income - such as salary taxed under the PAYE system.
If your loss was £450, carying it sideways against your salaried income should result in a tax reduction of £90 (£450 @ 20%)
HMRC don't refund actual business losses. They only offset the losses to allow you to reduce your overall tax bill.
Edited by Eric Mc on Thursday 27th January 14:03
Depends on the complexity. Simple return would start at around £100.
By simple, I mean a single PAYE source of income and small amount of investment income.
Most Self Assessments however, are bit more complex as they usually feature some or all of the following -
self employed income and accounts
rental income and accounts
dividend income
multiple sources of PAYE income
foreign income#
capital gains
By simple, I mean a single PAYE source of income and small amount of investment income.
Most Self Assessments however, are bit more complex as they usually feature some or all of the following -
self employed income and accounts
rental income and accounts
dividend income
multiple sources of PAYE income
foreign income#
capital gains
I usually do mine myself and I find it quite easy, I am a simple PAYE employee but I have to fill out the 'Trusts' section (Which is pretty easy because the solicitors send me a statement every year) but it seems everyone finds it quite complicated which makes me wonder if I'm going wrong somewhere...
Been using Taxcalc for the last 5 or 6 years. Makes it very easy because you import last year's file in to set up the return for this year so all the boring stuff is filled in, CGT losses carried forward, payments on account etc etc etc. Costs 20 quid a year, files on line & allows up to 6 tax returns to be run from the one license.
T84 said:
I usually do mine myself and I find it quite easy, I am a simple PAYE employee but I have to fill out the 'Trusts' section (Which is pretty easy because the solicitors send me a statement every year) but it seems everyone finds it quite complicated which makes me wonder if I'm going wrong somewhere...
It depends on the circumstances. Most people are required to submit Self Assessment because they either have sole trader or partnership income or they have rental income.Very, very few non-accountants are knowledgable enough to REALLY prepare trading accounts correctly and make the correct types of Capital Allowances appropriate for capital assets held or purchased in the relevant accounting period.
As I said earlier, many people THINK what they are submitting is correct but the reality is that the HMRC systems for detecting errors on tax returns and accounts are totally inadequate. They do not have an effective review and checking system in place so most mistakes just aren't picked up.
The situation pre-Self Assessment (up to 1996) was very, very different with ALL accounts submitted to the Inland Revenue being scrutinised to some extentr by an experienced and knowledgeable Inspector of Taxes. It was quite normal for about 1/3 of all sole trader and partnership accounts to attract some queries from the tax man. This just doesn't happen any more. I can go three or four years before any accounts I submit attract any questions at all - and it's not because I'm a brilliant accountant. It's because HMRC don't know what they are doing anymore.
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