HMRC says I need to pay £2440 tax on £1300 earnings. Can anyone help me figure out why?

[CountySheriff]

Not the most exciting topic, sorry, but hoping the mumsnet hive will have some idea or steer me in the right direction.

I pay tax through PAYE as I'm an employee but I do have additional income on the side - mainly freelance work, including some abroad.

I am a high rate tax payer and have not had any underpaid or overpaid tax in any previous years. 2017-2018 tax year PAYE coding notice did not show any tax underpaid.

Completed my self assessment to declare an additional £1300 earnings (additional to my £54000 salary, already taxed through PAYE), and got a massive shock when the calculation showed as £2,440 owing to HMRC. (Plus another £1200 for 'payment on account'!).

Have tried to call them today but the line was busy and kept cutting me off. And now the office is closed.

I can't figure out what is going on.

I've filled in a self assessment return each year for similar amounts and can't work out why this year the tax owing shows up as greater than additional earnings?

Am trying to submit today so any additional money owed goes out of my PAYE rather than a lump sum I need to pay in Jan.

Thanks Talkin, will do now and sending you a and

Your PAYE numbers are wrong .....
they have to be

Do you have health insurance that your company pay for?, my dh does and he gets taxed on that.

Do you get medical cover from your employer or similar. Could be that

There is definitely a box to fill in for tax which you've already paid through PAYE. Usually in the first section of the return.

Box 2 of page E1 ‘employment’

Box 2: ‘UK tax taken off pay in box 1’

Nope, no health insurance from emplyer (also no car or anything like that)

Ok, going back to first section to double check.

How much tax was paid according to your p60?

What is the tax that you have paid through PAYE on your P60?

What was your tax code for that year?

Is this your first tax return with self-employed income? You have to pay on account for the next year - so you pay your full tax on the amount you earned this year plus a payment to go to next year's self-employed tax bill, which is based on what you paid this year. If you aren't going to do any more self-employed work, or much less, you can get your payments on account reduced or removed.

Hi Folks

I am just messaging with County and testing her numbers through my TaxCalc software

when we find out the answer we'll post it for the benefit of all

It appears that you underpaid tax via PAYE

AHA!!!

I just saw that there is a section that was pre-filled in! With my emplyer's details! I definitely did not fill this in.

The income numbers in this section are higher than on my P60!

Income shown on my P60 is showing as 7k lowe than in the pre-filled in section of HMRC 'About this employment' section.

But tax paid is showing the same

Never mind, I misread the calculation thingy!

county
could you PM me the HMRC number
AND the P60 number
but the PAYE is still cockeyed

I am currently caring FAR too much about the tax return I did not do for a person I have not met.

I love mumsnet.

According to your figures you ought to be taxed on £37,147 but your calculation shows you are being taxed on £39 something. That’s where the extra 40% tax is coming from.

reveal
I have an FB friend (who I've never met) who is also an accountant
she and I test each others glitchy returns
we consider it CPD

Cross post with you!

TalkinPeace

At least your friend is an accountant... I'm a teacher! I've never even done my own tax return!

Fleurdalys

No, not everybody gets child benefit. Check your facts.

Anybody gets Child Benefit regardless or their earnings

Incorrect. It's means tested now.

Also the pre filled numbers is the income that hmrc holds for you. As it is incorrect you can call and correct it with them. You can correct the figure on the tax return and file it. Your tax bill will reduce automatically

Okidokee folks
we have an answer
and its rather scary for anybody using the HMRC data set to fill out their tax return

The figure transferred into the software through the RTI system appears to be @countysheriff s salary BEFORE pension deductions
hence why we tax geeks were all confused by the PAYE number

putting the P60 number into tax calc brings up the perfectly sensible tax bill of £200 on the untaxed income

Lesson is :
CHECK what HMRC say you have earned

Accountancy personal tax bod here and it appears that based on the calculation you posted HMRC haven't factored in your pension contributions as the basic rate band of £33,500 not been extended
Are the contributions through salary sacrifice or to a private pension?
If salary sacrifice then it sounds like the amount due relates to the child benefit charge which is tapered when you earn between £60 and £50 k...
Happy to help if needed 😁