[Closed] SA Tax returns and Childcare vouchers question

Whilst I admit this may not be entirely helpful but just because you are PAYE it doesn't mean that you have paid the right amount of tax. Aren't all salary sacrifices represented in the amount earned given in your P60?

Agreed and understand that but it just seems way to suspicious that the amount 'owed' is virtually identical to the Childcare Voucher sacrifice. Looks like I'll be dealing with Human Remains tomorrow, oh joy.

I suspect it's coincidence. If it was to do with the vouchers, it'd be the tax on the vouchers, rather than the face value of the vouchers.

Is your tax code sensible? Does it already take into account the "small bits" of extra income?

Do the total earnings shown on your P60 reflect the fact that you've made a sacrifice?

Don't enter the child care vouchers as earnings. The whole idea of salary sacrifice to get the vouchers is to make them tax free. Adding them to your tax return defeats the object.

Thanks guys, I suspect you may be right pdw. My tax code is the generic 1000L which appears ok and the other small bits is just interest on savings which have already been taxed at the lower rate so there is very small difference to balance out. Unfortunately my P60 doesn't (to me) reflect that I've made a sacrifice having said that I wouldn't know how to calculate it.

I've been on the Human Remains intranet and note that my employer has an agreement with HMRC that "All employees do not need to separately report any flexible benefits in the remaining parts of the Employment (Self Assessment) pages as all flexible benefits will be included in the figures on the form P60"

Unfortunately my P60 doesn't (to me) reflect that I've made a sacrifice having said that I wouldn't know how to calculate it.

The "total pay in this employment" on your P60 should be your annual salary less the value of the vouchers - taking into account any bonuses / payrises. Unless you've been given a P11D, then the only figures you should need to give about your employment is the total pay and total tax from the P60 i.e. you shouldn't disclose anything about the childcare vouchers.

If you stick the total earnings on your P60 into a salary calculator like this one:

http://www.thesalarycalculator.co.uk/salary.php

You should get the same figure for tax as is listed on your P60.

Thanks, will take a look at that tomorrow when I have all the numbers in front of me.

Last stupid question/s (honest):

As far as I understand I don't enter any pension contributions/information as they are all within my company scheme, is that correct?

Finally I invest in various work share save schemes (share match & save as you earn) both of these are held for 5 years to be tax exempt and have never cashed any in and have only ever reinvested dividends. Am I correct in thinking neither of these or associated dividends need entering?

Makes me realise how rubbish I am at these things...

Right chaps, I've just checked using the salary calculator above and if I don't include Childcare vouchers the number on my P60 and Salary Calculator match. Does that mean I need to account for/enter these vouchers on to my SA return form somewhere?

Ta!

You don't enter the childcare vouchers. The P60 figures for Pay and Tax Deducted is what you enter, the salary sacrifice for the childcare vouchers should already be deducted from your earnings.
The P60 should show what you have earned after salary sacrifice and the tax paid on those earnings.

What he said - P60 for Pay and Tax should be all you need for that employment.

Cheers Craig. So when I (almost) complete my SA online tax form there is a shortfall of ~£1.1k which I owe.

So I guess what I don't understand is why the tax figure generated on the online SA form is ~£1.1 more than what was taken off my P60 and equivalent as calculated using the Salary Calculator. Any suggestions or it is what it is?

This isn't making a lot of sense to me (ex HM Inspector of Taxes).

Why are you even required to complete a tax return? Is it because you are a Higher Rate taxpayer?
If so, are you receiving "excessive" childcare vouchers? The standard £243pm is halved for 40% taxpayers.

But the PAYE system should be collecting the correct amount of tax, more or less.

So I guess what I don't understand is why the tax figure generated on the online SA form is ~£1.1 more than what was taken off my P60 and equivalent as calculated using the Salary Calculator. Any suggestions or it is what it is?

I'm not trying to be glib here but assuming all the information is correct then the reason that the Self Assessment is saying you should have paid more is that you've underpaid. There are plenty of reasons why you might have underpaid, the most likely that springs to my mind is that your payroll has applied the wrong tax code, alternatively HMRC advised the wrong one.

The first is easy to check by comparing the tax code on your payroll with the notification that HMRC sent out, although that would have been around April last year. If you contact the tax office they should be able to advise what they think your code should have been. They should also provide a breakdown of the assumptions that were made to calculate it.

But the PAYE system should be collecting the correct amount of tax, more or less.

Assuming the correct code was calculate by HMRC and applied correctly by the company payroll.

If I look at my 13-14 P60 I note my tax code was 944L however for 14-15 my P60 says it's 1000L so suppose it could be something to do with that change so will contact the tax office to see what they think I should be on. If I have just underpaid tax then fine I'll pay it but just wanted to make sure.

Esme, higher rate tax payer however only claim £124pm childcare vouchers.

my 13-14 P60 I note my tax code was 944L however for 14-15 my P60 says it's 1000L

I think that's fine...they changed the base tax free allowance and that is why there's a change in the numbers.

I'd have to think you're putting something else on your SA that you shouldn't be. What else are you declaring besides your P60 details and a bit of bank interest?

The codes are just your tax allowances for those years 2013/14 944L is 2014/15 £9440 and 1000L is £10,000 and 2015/16 is £10,600.
It is clear you're not understanding what you are doing why don't seek some professional help? As Esme has said there is no reason for you to completing a tax return from what you've provided. Get an accountant to complete your return this year and request from HMRC to stop self assessment.

Whilst I admit this may not be entirely helpful but just because you are PAYE it doesn't mean that you have paid the right amount of tax

and

Assuming the correct code was calculate by HMRC and applied correctly by the company payroll.

As above and this. This years tax is based on lasts years earnings aka what HMRC expected you to earn. If you earn more, you owe them, less and they owe you, simples.

This years tax is based on lasts years earnings aka what HMRC expected you to earn. If you earn more, you owe them, less and they owe you, simples.

For PAYE that is totally wrong!

For PAYE that is totally wrong!

I'd be intrigued to know that prediction methods HMRC have to figure out what my earnings will be for the following tax year other than what my earnings were in the previous one!

Gonefishin, if your tax on your tax return is 80% or more deducted at source i.e. PAYE then you will have no payments on account to make.
If your income is all through PAYE then you should have no requirement to complete a tax return. It is normally only beneficial to do a return if you have work related expenses not met by the employer, pension contributions paid from your net earnings, gift aid where you can extend your tax allowance.

The OP might not want to elaborate, but as to 'why' my guess would be Child Benefit and earning over 50K. With the various allowances and deductions from gross that are allowable, it seems if you are borderline you're best to claim and then true up as necessary. Childcare vouchers (I think) are salary sacrifice so could bring a borderline case below the point at which any 'payback' is required, or at least reduce the amount needed to be repaid.

If your income is all through PAYE then you should have no requirement to complete a tax return. It is normally only beneficial to do a return if you have work related expenses not met by the employer, pension contributions paid from your net earnings, gift aid where you can extend your tax allowance

Given the changes that have been made to how higher rate tax payers are treated there will almost certainly be a need to fill in a tax return, I know that I do and have done for many years despite always being PAYE, although some of the above things mentioned applied and continue to apply. That said what I paid last year certainly informs how HMRC calculate my tax code for the next!

Sorry back now and on hold to the local tax office...

Doos, yes a bit of interest but literally £100.00.

Nope no child benefit ever claimed.

I've been pushed into the must do SA as I now earn £100K+, yes first world issue but issue all the same. Will be engaging an accountant after the christmas break. Thanks anyways!

I've been pushed into the must do SA as I now earn £100K+

Ah! That's the reason for the discrepancy. You no longer get your full personal allowance - it gets removed between £100k and £120k giving you a marginal rate of tax of 60% in that band.

Unfortunately, because of the idiotic way that this tax band is implemented, PAYE can't collect the right amount of tax from you because HMRC don't know that you've earned that much until after the end of the tax year. You should find that for next year you'll get a reduced tax code that will take into account what you earned last year.

Ah! That's the reason for the discrepancy. You no longer get your full personal allowance - it gets removed between £100k and £120k giving you a marginal rate of tax of 60% in that band.

To check if this is the case you need to calculate your adjusted net income

https://www.gov.uk/guidance/adjusted-net-income#what-is-adjusted-net-income

Esme - Member
This years tax is based on lasts years earnings aka what HMRC expected you to earn. If you earn more, you owe them, less and they owe you, simples.
For PAYE that

No it isn't. I confirmed it only last week with HMRC after recieving an unexpected payment request myself. You can intervene, by phoning them during the year and saying "oooh I have an unexpected windfall which means a sudden tax bill at the end of the year could you adjust my tax code to avoid a large single payment please?"

I'm not at the dizzy heights but a note of warning:

from you because HMRC don't know that you've earned that much until after the end of the tax year. You should find that for next year you'll get a reduced tax code that will take into account what you earned last year.

I was told by the HMRC person that they never [i]automatically code on an assumption beyond 100k.[/i] You can warn them of the expected Salary beyond 100k and they'll recode on that basis, or you wait u til you've done the SA and pay a single payment.

Err, you seem to have misquoted me there, Krypton!
My comment related to earnings from employment (PAYE), not other sources of income.

But [b]pdw[/b] seems to have solved the mystery - well done!

I did t, I copied your text like for like. For paye it is not wrong, as per my text above. And as per pdw's post.

Try it next year you'll see, but if you expect to earn over 100k make sure you hold a bit back to pay the amount HMRC will be asking for, or ask now to be coded on the amount you earned last year img into account what's above £100k.

Lots of good info guys and apologies for not clarifying my position earlier (being british n all). Having spoken with other guys from work in similar circumstances as myself I have submitted my SA tax form and requested the monies due to be taken from an adjusted tax code. Will check in with HMRC in January to clarify if this was indeed the case to ensure the tax code has been permanently updated.

Finally (honest) I'm in a couple of share incentive plans and have never cashed any shares in and have always reinvested dividends for more shares. The scheme does allow this so IIUC ( https://www.gov.uk/tax-employee-share-schemes/share-incentive-plans-sips) so long as they are held for at least 3 years there is no need to enter this on the SA form. Is that right?

Thanks very much guys.

Correct, or I've been doing it wrong! Only need to be entered if there is tax due but in these schemes that is normally taken care of by the scheme so you don't really need to do very much.