Soooo… I’m completing my self assessment tax return and I’m slight confused about the calculated payment owed.

My P11D for 2018/19 includes the amount I paid for Private Medical Insurance. This was listed on my payslip as an income that I assume I already paid tax on via PAYE. It even says ‘taxed through payroll’ next to the entry on my P11D.

So, do I declare this on my self assessment? The form says I should, but then the P11D value is being included in the calculation and I’m being asked to pay tax on. Effectively being taxed twice??

Anyone care to help a confused moron? I tried phoning HMRC, they cut me off as too busy to take my call!!

Reading around online, it suggests that taxable benefits managed as income in this way shouldn’t appear on my P11D. Is this right?

Sadly, I no longer work for that company so can’t just go down to the payroll department to query it. Probably should have paid more attention when the P11D was issued!

An accountant once told me that if the self assessment forms were straight forward and easy to complete he’d be out of a job………………

“the amount I paid”

You didn’t pay, your employer did.

“says ‘taxed through payroll’ next to the entry on my P11D”

If you’ve paid tax through PAYE it shouldn’t be on the P11d.

OP.

My medical insurance is now paid as yours was as “taxed through payroll” and has been for a few years. Prior to this it was a taxable benefit and caused no end of confusion for those of us that are PAYE.

Treat it as tax already paid was the advice I was given when HMRC came calling for more money. Not heard anything and my tax paid through PAYE has been bob on since.

Obviously I’m not an accountant.

Your form should include the amount of tax you’ve actually paid, so that will be compared with the amount due, based on salary, P11D, etc. If they balance you won’t have to pay any more.

It’s a couple of years since I’ve had to do one, but I think you can ask for the calculation once you’ve completed the form but before you submit it – so you can check whether the tax for the P11D has been collected twice.

As far as I’m aware healthcare is a taxable benefit, hence it appears on your P11d and your tax code changes allowing HMRC to tax you at source on it. If your employer produces a P11d you shouldn’t need to do a self assessment.

If your employer produces a P11d you shouldn’t need to do a self assessment.

Unless you have other income, pay into a pension, give to charity, claim child benefit etc etc

Loads of reasons why you might need to do SA…

NB You can just write to them with some additional figures / details and they do the corrections. That’s what I do with Gift Aid and Pension, just drop them a letter with the figures and they correct my tax code. Way simpler than doing a complete SA form.

An accountant once told me that if the self assessment forms were straight forward and easy to complete he’d be out of a job………………

😂

Seems a good place to ask…

Can anyone simply explain how paying into an additional pension reducing your liability works? Or a link to something in easy language

Lets say your taxable income is exactly £60k. So you would pay back 100% child benefit and be paying higher rate tax.

You want to reduce to £50k so you retain all child benefit.

Apparently you want to put £10k in a pension, but its not 10k as there is something called grossing up and then you claim back 20% as part of your return, and don’t have to pay the benefit back. Which means that £10k actually costs you £3.5k

So….if I open a pensions account (do not want to put any more in a gov scheme where they have full power to just change the retirement date) – do I just pay in £3.5k and thats it done? Where does this grossing up thing happen? By the pension provider? So they invest my 3.5k and multiple by 1.2 to put into shares? And then a year later when I do my return I get a further 20% refund and not have to pay back the benefit.

Is that how it works? *confused*

How much do accountants cost for one off help around things like this?

You want to reduce to £50k so you retain all child benefit.

Apparently you want to put £10k in a pension, but its not 10k as there is something called grossing up and then you claim back 20% as part of your return, and don’t have to pay the benefit back. Which means that £10k actually costs you £3.5k

You pay £10k into your pension via Salary Sacrifice, so you never see the money and it goes in as £10k gross and gets no tax relief.

Your PAYE salary is thus £50k which is all Inland Revenue care about. Thus you don’t get taxed on Child Benefit etc.

You can only do this if your employer offers a Salary Sacrifice pension scheme, although they are pretty common now as it also saves the employer money on Employer’s NI contributions, which they often pay into your pension as well (or at least ours does).

Sorry if I wasnt clear.

This is not via an employer scheme (which I believe isn’t salary sacrifice though I can’t find anything either way in the paperwork, if the numbers on P60 are to be believed)

This is a seperate personal pension invested from my net income, so I would be looking for tax relief on it. I want to build a “SIPP bridge” to retire prior to DB pensions kicking in

Example from a guardian article:

ake David and Claire, who have two children and receive £1,789 a year in child benefit. Claire earns £60,000 a year while David is a stay-at-home dad. As things stand, Claire would have to pay back all the child benefit as a tax charge.

But, says Nigel Murdock at Wolverhampton-based financial adviser Autonomy Wealth, if Claire pays £8,000 into a personal pension, this will be “grossed up” to £10,000 (what she paid in, plus the basic rate of tax). This takes her adjusted net income back down to £50,000, so the family will escape the tax charge. Claire will also be able to claim an additional 20% tax relief on the pension contribution through her tax return.

This means Claire has an extra £10,000 in her retirement pot – which has effectively cost her only £6,000 – while the family gets to keep the £1,789 child benefit.

Bit I’m asking about is how does this grossing up happen?

Yes, you put £10 of your taxed income into a SIPP and your taxable income is then treated as £50k. The SIPP company, after about 2 months, will credit your account with £2.5k, so making your pension worth what it would have been if it had been taken out of pre-tax money assuming you were paying 20% tax. If you actually paid 40% tax on the money you put in, you can get a another £2.5k refund from HMRC, but you will have to do a SA return to claim it. What you put in the SIPP effectively is taken from your income before tax. When you get the pension, which currently has to be after you’re 55, you get 25% tax free, and pay whatever the rate of income tax is then on the rest.

Yes, you put £10 of your taxed income into a SIPP and your taxable income is then treated as £50k.

Pretty sure that’s not the case, your P60 would still say £60k gross income, which is all IR care about for Child Benefit taxation….

Yes, but there is a section to add in any additional pension contributions which should be taken into account in reducing your net income along with things like gift aid etc….

Confusing isn’t it

Yes, but I was under the impression that for Child Benefit, only the Gross income figure was considered (could be wrong, as we only have Cats and they don’t quality).

I was under the impression that for Child Benefit, only the Gross income figure was considered

See https://www.gov.uk/child-benefit-tax-charge

To work out if your income is over the threshold, you’ll need to work out your ‘adjusted net income’.

Your adjusted net income is your total taxable income before any personal allowances and less things like Gift Aid.

Paying into a personal pension scheme reduces your tax liability – you get basic rate tax back at source (added to your contribution) and then if you’re a higher rate taxpayer it extends your basic tax band meaning you get the difference between basic and higher rate back.
Looking at that link it looks like you can take personal pension contributions into account – there’s a calculator I’m going to try now!

I have a self assessment question myself and thought i’d resurrect this thread before I resort to an accountant or call HMRC.

I need to enter foreign earnings for last year and have all the data to hand. A “Net of Foreign tax relief” scheme was in operation apparently. My P60 details the total income (inclusive of foreign earnings) however the total tax paid does not include the foreign tax paid.

How should i enter data to ensure correct reporting? Eg, Should i reduce the P60 income by the foreign income so that it matches the P60 tax paid, then separately record the foreign income/tax paid elsewhere?

When i mess around with various scenarios I get some wildly different results.

Thanks for any assistance.