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Where Taxpayers and Advisers Meet

can someone help me about personal tax about saving starting rate

xiao
Posts:2
Joined:Mon Jul 03, 2017 10:16 am
can someone help me about personal tax about saving starting rate

Postby xiao » Mon Jul 03, 2017 10:26 am

Hi ,I am new for this forum, say hello to everyone.
recently I do tax return online, confused one case, I use my aat personal tax knowledge calculate below case, but different from HMRC online result ,hope could get help for you . it is not complicated,
salary: 1000
profit from property :7000
interest from banks: 32000
dividends: 4700
how much tax should paid in 2016/2017?
My answer is
1000+7000-11000= -6000
32000-6000-5000-500=20500 *20%=4100
Divides less 5000 so is 0
total personal tax for 2016/2017 is 4100
but HMRC online said is 5100, it isn't considered 5000 as starting rate, is that correct?

many thanks

uktaxation
Posts:7
Joined:Tue Jun 27, 2017 10:05 am

Re: can someone help me about personal tax about saving starting rate

Postby uktaxation » Mon Jul 03, 2017 2:16 pm

Hi

Not sure on your calculations. Experts can comment.

But in regards to incorrect result from HMRC see if following links relates to your case :

http://www.accountingweb.co.uk/tax/hmrc ... per-filing

https://www.taxation.co.uk/Articles/201 ... -s-systems

Based on the above links, I am too not getting a clear answer whether to go for an online Tax return or Paper Based.

Regards

AmanSood
Posts:216
Joined:Mon Jan 09, 2017 4:12 pm

Re: can someone help me about personal tax about saving starting rate

Postby AmanSood » Mon Jul 03, 2017 3:14 pm

Think you are double counting the £5,000 dividend tax free allowance in working out your taxable interest. If you include the £5,000 offset then the total tax payable would be £5,100 in line with HMRC's calculation.
Advising on UK employment, expatriate and personal taxes
aman.sood@e-taxconsulting.com.
+44 (0) 207 846 0155

robbob
Posts:3228
Joined:Wed Aug 06, 2008 4:01 pm

Re: can someone help me about personal tax about saving starting rate

Postby robbob » Mon Jul 03, 2017 4:16 pm

Hello xiao

Your circumstances seem to be an exact fit (coincidence?) of the article linked by uktaxation earlier - this being the case most online calculators using the hmrc specified rules for calculations meeting the return submission standard will generate the wrong total - this includes the hmrc calculator.



https://www.accountingweb.co.uk/tax/hmr ... per-filing
those with total income made up of savings and non-savings income over £32,000 of which the non-savings income is between £11,000 and £16,000
Group A
These taxpayers should benefit from the savings rate band of up to £5,000 as their non-savings income not covered by the personal allowance will not use all of the savings rate band. The HMRC tax return software specification fails to give the benefit of the savings rate band in this scenario and hence overcharges taxpayers in this group by up to £1,000.
Example
A taxpayer with non-savings income of £11,000 and savings income of £26,000. The correct amount of tax for 2016/17 is £4,000. Using software based on the HMRC software standards will calculate the tax as £5,000. If you file online the taxpayer will be overcharged by £1,000.

xiao
Posts:2
Joined:Mon Jul 03, 2017 10:16 am

Re: can someone help me about personal tax about saving starting rate

Postby xiao » Mon Jul 03, 2017 4:59 pm

Hello xiao

Your circumstances seem to be an exact fit (coincidence?) of the article linked by uktaxation earlier - this being the case most online calculators using the hmrc specified rules for calculations meeting the return submission standard will generate the wrong total - this includes the hmrc calculator.



https://www.accountingweb.co.uk/tax/hmr ... per-filing
those with total income made up of savings and non-savings income over £32,000 of which the non-savings income is between £11,000 and £16,000
Group A
These taxpayers should benefit from the savings rate band of up to £5,000 as their non-savings income not covered by the personal allowance will not use all of the savings rate band. The HMRC tax return software specification fails to give the benefit of the savings rate band in this scenario and hence overcharges taxpayers in this group by up to £1,000.
Example
A taxpayer with non-savings income of £11,000 and savings income of £26,000. The correct amount of tax for 2016/17 is £4,000. Using software based on the HMRC software standards will calculate the tax as £5,000. If you file online the taxpayer will be overcharged by £1,000.
Hi robbob, yes it is a coincidence, I have the same situation with what your linked. Hope HMRC could change their system ,if not ,I am not use online system .Seemed study aat course not bad :)

uktaxation
Posts:7
Joined:Tue Jun 27, 2017 10:05 am

Re: can someone help me about personal tax about saving starting rate

Postby uktaxation » Mon Jul 03, 2017 5:56 pm

Hi Robbob

In my case following are income details, do you think I should also go with Paper Returns for FY 2016-17 ?

I have taken a total dividend of £ 28575 and Gross Salary of £ 11000

Regards

robbob
Posts:3228
Joined:Wed Aug 06, 2008 4:01 pm

Re: can someone help me about personal tax about saving starting rate

Postby robbob » Mon Jul 03, 2017 6:50 pm

Hello uktaxation
uktaxation
In my case following are income details, do you think I should also go with Paper Returns for FY 2016-17 ?

I have taken a total dividend of £ 28575 and Gross Salary of £ 11000
As previously advised by others (i think you have previous been told) you are fine.

The terminology here is confusing - this is dangerous as terminology is important here - dividends definitely are investment income but hmrc advise here (link below) reference "savings income" for the calculation that is relevant here - this scope does not include dividend income unless its of the 20% interest distribution type which is quite rare and will not the case for you.


https://www.gov.uk/government/publicati ... -allowance

2. What counts as savings income
It also includes:
interest distributions (but not dividend distributions) from authorised unit trusts, open-ended investment companies and investment trusts

In summary the difference between you and the other poster on this thread is that they have large sum of interest received and you do not.


PS - please don't say your dividend income is actually "interest distributions" where tax has been deducted at 20% !!!

robbob
Posts:3228
Joined:Wed Aug 06, 2008 4:01 pm

Re: can someone help me about personal tax about saving starting rate

Postby robbob » Mon Jul 03, 2017 9:37 pm

Hi ,I am new for this forum, say hello to everyone.
recently I do tax return online, confused one case, I use my aat personal tax knowledge calculate below case, but different from HMRC online result ,hope could get help for you . it is not complicated,
salary: 1000
profit from property :7000
interest from banks: 32000
dividends: 4700
how much tax should paid in 2016/2017?
My answer is
1000+7000-11000= -6000
32000-6000-5000-500=20500 *20%=4100
Divides less 5000 so is 0
total personal tax for 2016/2017 is 4100
but HMRC online said is 5100, it isn't considered 5000 as starting rate, is that correct?

many thanks

it is not complicated, - being blunt i beg to differ but hey ho difference of opinion is what its all about

Ok its getting late and its been a long day so i am probably losing the plot anyway, i have chucked the figures into my tax calculator and its saying this is an online exclusion case - however its coming up with a figure of £5,700 which i would have expected to be the same as the 5,100 you quoted. i.e this is expected to be wrong over the top but should match hmrc


I have income 44,700
basic rate tax 5k at 20% 1k (probabbly the wrongly billed 1k)
starting rate 0 at 0%
nil rate £500 at 0%
basic rate 23,500 at 20% = 4,700
dividends from companies - 4700 at 0 = nil

total 5,700

to be continued - i have to leave to go get pizza - if anyone else can post their calcs with details that will help me get back to where we should be

uktaxation
Posts:7
Joined:Tue Jun 27, 2017 10:05 am

Re: can someone help me about personal tax about saving starting rate

Postby uktaxation » Tue Jul 04, 2017 12:33 pm

Hello uktaxation
uktaxation
In my case following are income details, do you think I should also go with Paper Returns for FY 2016-17 ?

I have taken a total dividend of £ 28575 and Gross Salary of £ 11000
As previously advised by others (i think you have previous been told) you are fine.

The terminology here is confusing - this is dangerous as terminology is important here - dividends definitely are investment income but hmrc advise here (link below) reference "savings income" for the calculation that is relevant here - this scope does not include dividend income unless its of the 20% interest distribution type which is quite rare and will not the case for you.


https://www.gov.uk/government/publicati ... -allowance

2. What counts as savings income
It also includes:
interest distributions (but not dividend distributions) from authorised unit trusts, open-ended investment companies and investment trusts

In summary the difference between you and the other poster on this thread is that they have large sum of interest received and you do not.


PS - please don't say your dividend income is actually "interest distributions" where tax has been deducted at 20% !!!

Hi Robbob

Thank you for the detailed explanation. Only thing which is confusing me is the advice I am getting from my accountant wherein they are advising to go for Paper Returns instead of Online for
FY 2016-17.

I am happy to go with Paper returns but I am in an urgent need of SA302 and if I go with paper returns then I think I will not be able to get SA302 soon.

Is there a way to get SA302 quicker if I file paper returns ?

Regards

LozaACCS
Posts:1504
Joined:Wed Aug 06, 2008 3:55 pm

Re: can someone help me about personal tax about saving starting rate

Postby LozaACCS » Thu Jul 06, 2017 9:17 pm

robbob

I am not able to navigate these waters much at the moment, so apologies for the belated response, I trust the pizza was worth the travel time.
I am struck by the utter confusion regarding this matter, God only knows how we can end up with a situation where HMRC (the department) (and the contributors to this site) have to confess to not knowing how to work out the tax, what happens if the scenario prevails where an on line return cannot be filed (because HMRC do not know how to do it) and the paper return is not filed by 31 October, can anyone seriously suggest that a penalty could be charged, the First Tier Tribunal should be pretty busy.
I have looked for a response saying the liability is £4,700, calculated as follows;

5000 @ nil = nil (because there is no non savings income)
500 @ nil = nil (because the OP is a HR taxpayer, so does not get the 1000 allowance)
23,500 @ 20% = 4,700 (the standard rate for savings)
4700 @ nil (below 5000 so exempt).

I cannot see any advantage in re allocating the PA away from the norm, ie NS/Sav/Div, I think the difference between us is your calculation of the NRB savings allowance at 20%, I would suggest that should be nil.


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