Tax question.

[STONEISLAND]

I work on commission and I'm positive I have paid too much tax, :Yikes: and owed some. My collage has paid someone to check weather they have paid too much tax and was owed £300 (quiet a lot) :dozey: the company that checks weather you have takes a % ( £100 ) of what they where owed. :mad:
Is there an easy way of checking weather you are owed tax? :confused: With out having to pay somone? :confused:

Thanks :)

[Paul]

Work it out yourself ? or maybe just contact the tax office.

[STONEISLAND]

Work it out yourself ? or maybe just contact the tax office.

'Work it out yourself ' Thats my question? :confused: How do i work it out myself ?

[zovat]

'Work it out yourself ' Thats my question? :confused: How do i work it out myself ?

you can try this site : http://www.i-resign.com/uk/financialcentre/tax_calculator.asp
however the basic rules are :

up to your tax allowance - tax free (default is 4745 p/a)
the next 1920 is taxed at 10%
the next 27980 is taxed at 22%
anything beyond that is taxed at 40%


so - say you earned 25,000 p/a - with no extra taxable benefits (car/company health cover etc)

25,000 - 4745=20255 -(your taxable salary)

first 1920 @ 10% = 192

20255-1920= 18355 (remaining taxable income)

next 27980 is at 22% - so 22% of 18355=4033.7

total tax payable= 4033.7 + 192 = 4225.7

HTH

[SMHarman]

If you only earn money from savings (bank interest) and paid employment this is fairly easy, though looking at the tax forms you might not believe that...

First, at the end of the year you recieve two documents a P60 and a P11D. If you have no benefits in kind (company car, medical insurance etc) you may not recieve the latter. This will be the information you need from your employment.
Your bank will send you a tax certificate for your interest recieved. You need that too.
Now add up the total figure on the P11D, the Gross Salary (including commission, tips etc) on the P60 and the Interest Rec'd. That is your taxable income.
Now start deducting... Depending on the year the rates are different, you can get them from this page http://www.ir.gov.uk/rates/it.htm
Deduct 4615, multiply this figure by 0 = 0
Deduct 1960 multiply this by 10% =
Deduct either the balance or 28539 and multiply by 22%
Take the balance and multiply by 40%.
Add these up - This is the tax you should have paid.

Back to the P60, their is a box on it showing tax paid. Deduct this
The Bank interest tax cert - Deduct this.

The balance you are left with is tax owed (if positive or due back to you if negative).

Thats a basic tax return. If you pay to a personal pension plan (not a company one) that adds a little complication. If you are a basic rate tax payer only (22%) then you can ignore the bank interest once you have established that your total earnings (pay and interest) is not over the 40% band (so take it out of the earned and the taxed.

If you are a member of a professional organisation that is kinda necessary for your job then you can deduct these membership fees from your gross salary (but you need to inform the IR going forward).

I think thats the main quirks for your average joe, it can get horribly complex, but this should see if you are in the right ball park. Remember if this year you are owed tax and claim it, check that in previous years you don't owe them. Opening this year could cause them to review the position in previous years.

It's easier to show this in a table or an excel spreadsheet, but neither works on a forum.

[zovat]

oops - figures were the wrong tax year - here are the lates (from the inland revenue website)

Taxable bands 2003-04 (£) Taxable bands 2004-05 (£)

Starting rate 10% 0 - 1 960 Starting rate 10% 0 - 2 020

Basic rate 22% 1 961 - 30 500 Basic rate 22% 2 021 - 31 400

Higher rate 40% Over 30 500 Higher rate 40% Over 31 400


so first 1960@10% first 2020 @ 10%
next 28539 @ 22% next 29379 @ 22%
remainder @ 40% remainder @ 40%


<edit - darn, just noticed SMHarman has put the correct figures in for last tax year already :clap: >

:angel:

[iadom]

My collage has paid someone to check weather............
Is there an easy way of checking weather

I must resist, I must not rise to the temptation..........;) :angel:

[STONEISLAND]

I must resist, I must not rise to the temptation..........;) :angel:

Yes I know :dunce: :(

[SMHarman]

I must resist, I must not rise to the temptation..........;) :angel:
:erm: Look out the window...

[Caspar]

A big thanks to zovat and SMHarman...very useful info these... :tu: :)

I've done a bit of freelance web development work this year...so I need to sit down and work it all out... :erm: ....will post when I get confused!

[altis]

:D

http://www.met-office.gov.uk/

[STONEISLAND]

:afire: you guys want to leave it weather I'm wright or Wrong :dozey:

[Caspar]

:afire: you guys want to leave it weather I'm wright or Wrong :dozey:

owe, leave him alone their, its not his fault he gets all mixed up know and again. Were did the days go when we can all just get along in piece and harmony...



;)

[SMHarman]

A big thanks to zovat and SMHarman...very useful info these... :tu: :)

I've done a bit of freelance web development work this year...so I need to sit down and work it all out... :erm: ....will post when I get confused!
Freelance is another taxable beast altogether (freelance is another taxable beast). Payroll is taxed under Schedule E (don't Ask). Freelance is as a sole trader so Schedule D.
You will need to complete a separate form for the schedule D, possibly pay self employed NIC as a result but also bear in mind that many expenses you could not deduct as an ee can be deducted as a freelance (pc hardware upgrades, broadband costs, telephone calls / line rental) as long as you don't take the mickey you will be able to reduce your tax bill on this significantly.

[Caspar]

blimey, I didn't think it would get that complicated :erm:...is there a IR guide to freelance-type work...? :)

[SMHarman]

blimey, I didn't think it would get that complicated :erm:...is there a IR guide to freelance-type work...? :)
http://www.ir.gov.uk/individuals/moretma.shtml
about half way down heading "Self Employed"
You'll want to look at
Starting up
Status
NI
Expenses and Benefits
as a start...