Self assessment tax for over £100k salary - is this real!?

[HappyButHangry]

Hi folks,

I'd like to understand something as this turn of events has me quite worried.

DH was working abroad in Switzerland before the pandemic (we were engaged back then) and he ended up remotely working over the pandemic. A year later when doing his self assessment tax return it turned out he owed the UK £100k tax on top of what he had anyway paid in taxes in Switzerland. So he paid it in £30k installments over the year.

Towards the end of that year (2021), he was made redundant. And he was unemployed for the majority of 2022. He now has a contracting job. He completed his tax return the January just gone and the other week we got a letter saying he still owes an additional £70k in taxes.

DH says he must have miscalculated something and HMRC are probably right. But I'm in disbelief. Is this what it's like for people that make over £100k? Do the government really expect you to just have these sums of money sat in your account? DH is unhappy about it but says it's normal. I feel like something has been badly miscalculated here.

I don't need exact figures, but would like to know whether this sounds normal and if that is indeed how much people pay in taxes?

Many thanks!

As an aside: following his year of redundancy, and having just bought a (tiny) house, and with DC1 on the way, we really could have done with having some back up cash and I just feel like this is such bad luck. DH's new job pays half of what he was on before and I only get SMP for maternity leave.
Also, none of this is to brag. I myself am on a very average income far below £100k and so I'm really not familiar with the above tax situation.

I suggest he logs into his HMRC account and requests to have the payments on account lowered to a more realistic amount (one that reflects his current earnings). It's fairly simple to do . If he can't do this himself he can get his accountant to do it for him.

I didn't think it was necessary to inform whether or not we already own existing properties.

With respect to KPMG, his old company provided the service to him so we didn't need to pay for the accountant services.

Also he isn't currently self employed. The temp role is through a company.

And HMRC are aware of the salary drop and the redundancy.

@smittenkittennn - the big 4 all have departments that deal with smaller aspects of personal tax.

I'm really sorry OP, but most of this is absolute basics. And if your Dh who is on a very large salary doesn't understand basic living maths, basic tax, that you need to pay tax on the amount your earn, then one has to question his inability to ask anyone for very basic advice.

"Switzerland still owe him some kind of rebate. "

So why is he not emailing urgently the person who did his Swiss tax part, asking them to chase this rebate.

Chase all you want. The Swiss tax office will pay it when they are good and ready. Speaking from experience

No doubt Thimble! The wheels of foreign tax move even more slowly than UK HMRC!
But until OP's Dh instructs someone new to chase, no paper trail will exist! So unless he does quickly, as we all have recommended hires a new accountant, surely digging out all the Swiss info, emails, and chasing the person who last emailed him re the Swiss part, can't do much harm.

Also tax adviser here and I agree - seek professional advice.

It depends how much of a redundancy payment he got too. If he got a big payout some of it will be taxable. It won't matter if he is on a lower salary.

And yes people who earn enough to have big tax bills save it somewhere as a tax reserve to pay their tax bill when it arrives in answer to one of your earlier questions.

Except this isn't small (other than the numbers here - in big 4 speak anyway) as it involves crossborder tax advice. Guarantee even competitive fees from big 4 would be in the low thousands. Big 4 isn't going to engage for £500 or anywhere near that for a one-off like this. The admin headache isn't worth it. Speaking from 16+ years with big 4.

I’m also really struggling to understand how a couple with wealth and means like this have such a miserable understanding of the this stuff.

Nor why the OP is determined to present herself as poor and clueless (‘following his year of redundancy, and having just bought a (tiny) house, and with DC1 on the way, we really could have done with having some back up cash and I just feel like this is such bad luck’) yet responds to questions with information about £65k weddings and allusions to owning multiple properties.

I work for KPMG - he should get in touch with his contact there for clarification, and we would review his tax returns and payments if required. It will cost more than those have cited here, but if you ask to be put in touch with the private client team they would be able to confirm the position relatively quickly.

I’m thinking the same. If he has paid £100k in tax and still owes £70k why the hell are you in a tiny house and worried about being on mat pay?
Never known anyone who earns enough to pay£100K in tax do their own self assessment either. Presumably his redundancy was sizeable.

Something isn’t adding up here.

@smittenkittennn - It’s likely not that complicated if KPMG did the Swiss stuff, it’s just getting someone to check his last couple of years returns. I agree it won’t be £500 but I don’t think it is a few thousand either. Ah well you beat me by 7 years with the Big 4 so what do I know.

Those who are incredulous that a higher earner doesn't "get tax" in my view it is not that unusual. I know plenty of high earners who don't. I put myself in that category ( and I'm married to a tax lawyer). I don't take any interest beyond giving my accountant the information they need and saving 50% of everything I earn so that I can pay the tax bills when required. Incidentally my tax lawyer spouse also pays an accountant to do his tax returns.

But that is getting tax. You recognise you need to pay it, get an accountant and save 50% of your earnings to pay it.

You don’t need to understand the intricacies of the tax system. What’s remarkable here is that neither of them seemed to in any way anticipate the tax.

@eurochick oh come on.
You don't need to know the * intricacies of the UK tax system, or be a PwC /KPMG Tax Partner to know the basics. You earn more than 99.9% of UK population. And you're gonna have to pay tax on that. No shit Sherlock.