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Query regarding Tax Calulation

Archived UK Tier 1 (General) points system forum. This route no longer exists.

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poojabhatt
Newbie
Posts: 41
Joined: Wed Mar 27, 2013 3:03 pm

Query regarding Tax Calulation

Post by poojabhatt » Sat Jun 27, 2015 3:55 pm

Hello all,

A quick query regarding my Tax calculation. Any help from moderators/gurus/experts especially with an accountancy background will be much appreciated.

I made “X” amount of money from salary and “Y” amount of money from self-employment in my claiming period. Income from both sources combined, I could meet the threshold required for my Tier-1 General visa and my visa was approved. For salaried Income the Tax was deducted at source and they used up my Personal Allowance [Tax free income].My question is: When declaring income to the HMRC wouldn’t it be right if you just declare the income from self-employment [“Y”] and pay the taxes on that amount as the tax on income from salary has already been deducted at the source ? I would assume I would not be able to use up my Personal Allowance [Tax free income] as it has already been used up by the employers. Is this correct?

The reason I ask this question is because I have spoken to a few accountants & I`m getting different advice from each of them. Some say I should add both- (1) income from salary and (2) self-employment within the given tax year [April-April], deduct Personal Allowance [Tax free income] and pay the taxes on that. The others advise that I need to declare income only from self-employment and pay taxes on those without deducting the Personal Allowance [Tax free income].The best, or rather the worst bit is a part of the salaried income [almost 50%] does not even fall within the claiming period and adding it to my net income is doing nothing but increasing my tax as taxes above a particular threshold increase from 20% to 40%. I could save a few thousand pounds if I do the later and I would prefer to do that but I would rather do the right thing at this stage.

I would please request any advice from experts/gurus. Thanks a lot for this in advance.

Kind Regards,

argus7
Senior Member
Posts: 577
Joined: Sat May 08, 2010 12:18 pm
Wales

Re: Query regarding Tax Calulation

Post by argus7 » Sat Jun 27, 2015 4:47 pm

You have to club both income from SE and Emp, in a tax return as SA102 - Employment and SA103 Short SE Income when filing your tax returns.

So whatever tax that needs to be calculated will be minus personal allowance for that year and 20% calculated on the allowed limit and rest on 40%.

So when you do SA it will be calculated at 40% and that will be your tax bill.

This is the right and preferred way.

poojabhatt
Newbie
Posts: 41
Joined: Wed Mar 27, 2013 3:03 pm

Re: Query regarding Tax Calulation

Post by poojabhatt » Sun Jun 28, 2015 4:13 pm

Thank you

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