Self-assessment tax. £9k!!

[FlyingGreenFrog]

Hi, can anyone give me any advice (reassurance!) about self-assessment tax?

I’ve just submitted my self-assessment and it’s given me a bill of £9k! Plus an extra payment of £3.5k in June.

But I only earned £16k self-employed. I also briefly worked for a company earning about £3.5k. So a £9 tax bill on a salary of les than £20k seems insane?? It must be wrong mustn’t it?

I’m genuinely terrified here. Hadn’t expected it to be more than a couple of grand.

grateful for any help or insights!

Is it worth getting an accountant on such an income?
You don't get £500 off your taxes.
You get £500 off your taxable income

On £20K, that's basically paying about £500 to get £100 off your taxes. You still end up paying £400 extra

Accountants are likely to pick things up that you don't, and you get peace of mind that the return is correct

You don't need an accountant as you know the problem - somehow your income is showing as £37k so the tax and NI calculation is based on that

You need to go back through your self assessment and look at the figures you have entered. There won't be that many places where you have put any numbers in so it should be easy to spot.

If you printed it out I'm sure you can spot it.

Have you submitted?
if not go back to the very first page where you enter income and be alert at every stage. D you have property income from a rental? Don’t enter that as a separate business. There’s a section that follows which asks if you have rental income from property… I once entered it as a separate business and then again …. And doubled my figures …

As an aside, obviously I don't know what your job is but that's a crazy low amount for your expenses. Isn't there anything - travel, phone, computers, percentage of bills, training - or something to bump it up?

Can you post a copy of the tax calculation - obviously with name etc removed.

If you are working from home you can claim a percentage of household bills-ie. heat & light, internet, phone bill, use of car.

It sounds like you have inserted £16k twice plus £3.5k, which comes to £35.5k?

I use an accountant to check and submit mine, I am PAYE on a part time job with a second variable income. It costs me £200-300 for their service, well worth it for my stres levels! Can you ask one to double check your submission?

Op I commiserate. They have taken my tax and want an additional 1000 plus before June. I also pay paye and don't understand why it's all so high.
My taxed income was about 1600 but lowered due to someone expenses.
I still find it a lot.

I had the same issue this year. HMRC assumed I would earn the same this year as I did last (I won't as last year was a good year and this will be a bad).

If I recall correctly there was nothing on the SA input form I could change this. Instead when the SA had been submitted there was another place on the HMRC SA web site where I could amend my expected income for this year, I then got a revised tax demand a few days later. I cannot remember where in the HMRC SA web site I could amend the expected earnings for this year, I just stumbled across it.
At least this is how I dealt with it.

Good luck.

Use an accountant , it will save you a lot of grief

I'm a sole trader and my accountant charges £200

If you view the calculation, it should be obvious where the error is. Post it on here if you don’t understand it and we can help.

No that does not sound right.

I know you may not earn enough to make it seem worthwhile, but maybe you get an accountant to help? My accountant charges me £300 a year on an income 3 times yours which seems worth it. Plus you have a backup if they get it wrong.

Also- failing that- calling HMRC may seem a thankless bloody task with call waiting etc but when I have rung them in the past they have been amazingly helpful- and human.

I say this kindly, but if you don't know what you are doing then you would be better off paying an accountant. It is worth paying a few hundred if it saves you more in tax, plus you have the satisfaction of knowing that it has been done properly. (You shouldn't have submitted the form if it had the wrong income on it, always double check everything before you file).

Your expenses do seem very low, I would imagine that there are more things that you could claim depending on what your self employment is.

You should have completed 2 sections, 1 for employment using the P45 and 1 for self employment where you enter your gross income and all expenses. Hopefully you have saved a copy of the form, but if not, you will be able to download one from your Government Gateway (GG). Also download the tax calculation from the GG.

Once you have the copy of the form, check each section to see where you have gone wrong. It does sound like you might have entered something twice.

Did you pay any tax on your employment? If so, did you enter that onto the tax return?

Your tax bill should not be anywhere near the figure that you have said. You are over both Class 4 NIC and Class 2 NIC thresholds, so would pay both of those along with 20% tax on your total earnings after deducting your personal allowance of £12570. .

Hi, I'm a Bookkeeper and qualified SATR Agent. If you save the Colour Copy of the Tax Return as a PDF and the Calculation as a PDF and send it to me, I'm happy to have a quick look for you to see if you've input something wrong. No charge, as it's just a quick look over. PM me if you'd like me to do that and I'll give you my email details.

that still doesn’t add up to £9K

I agree with the others about going back over all the entries and checking them through to the tax calculation.

If your expenses are only £140 don't claim them. Claim the trading allowance of £1,000 instead. It's a box the you tick in the self employment section.

I'm just an Alpaca, but I have to submit an annual tax return because the sale of my wool is above the tax-free personal allowance.

I have to agree with @Notjustamum10 in that it seems your income may have been entered twice. I have just hoof-tapped on some stones in the field and worked out the following liabilities:

Income tax - £1,386
Class 4 NIC - £398
Class 2 NIC - £164 (assuming you are not already paying this by direct debit)

You will also need to make a payment on account for 2023/24 on 31 January because we are 10 months into the current year and you will have earned something for the year to date.

If your income is going to remain the same or increase you will need to make a payment on account of half again. But certainly the total is going to be less than £3,000. I hope you feel less a-Lama-d now.

I have never been able to reduce my payment on account. Have you seen how the price of Alpaca wool just seems to go up each year?

Do you have a second employment?

Click the back buttons and go through your calculations again.

You've made an error somewhere. You can earn almost £13K without any tax but you will still have to pay NI.

Are you sure that the amount of £3.5k is shown correctly and you've not put £35K?

Don't forget though that the tax you owe will be including a half-year ahead, and NI contributions.

TBH if you find it hard to do a SA you might want to think about getting an accountant to do it next year. They can charge around £400 if you have all your receipts to show your outgoings/expenditure.

I don’t do self assessment so forgive me if this is not possible but could the £9k be the taxable income? In other words the amount of income that is subject to tax after taking off the tax-free allowance from your total income and so the actual tax due would be 20% of the £9k which is about £1.8k less any tax you may have already paid on the earnings?

Delete the boxes where you input the income , then recalculate - if it’s still showing income figure then you’ve entered it somewhere else too so hunt it down

No, thats not how it works at all.
Also, that is still not an accurate amount, since the OP has earner less than 20k, and the personal allowance is nearly 13k. So it could only have been 7k of taxable income, not 9k.

@FlyingGreenFrog You must have put in something wrong in it, so yeah, just go through the whole thing with a fine tooth comb.
Also, regarding expenses, as you are self employed, you can claim all sorts of expenses, and you should be doing just that! £140 for a whole year of work does not sound like even remotely a "correct" amount of expenses!
You will probably have some sort of insurance, travel, phone, even use of the home as an office you can claim!
Keep that in mind for next year!

All the details are on the calculation page at the end, it shows exactly how the tax is worked out, given the size of the figures it will be obvious where the mistake is if there is one

Good point.