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Where Taxpayers and Advisers Meet

Baffled

kayanos
Posts:9
Joined:Thu Apr 24, 2014 2:29 pm
Baffled

Postby kayanos » Tue Jan 26, 2021 4:54 pm

I'm trying to work out how much money I have to pay hmrc this year. I'm finding the way they give me the calculation confusing

My calculation is :

£2,580.33 First payment on account due jan
£5,319.67 balancing payment due jan
£2,580.34 second payment on account due july

last year I paid £1290.24 x 2 payments on account (I believe these are deducted from my balancing payment for this year correct?)

How much am I paying this year ?

Also I find how they calculate class 4 NI confusing. Why do they tax me @20% on £16,595 (which is my profit minus personal allowance) but they use a figure of £20,463 to work out my class 4 national insurance, why do they use a different figure and not £16,595.

robbob
Posts:3066
Joined:Wed Aug 06, 2008 4:01 pm

Re: Baffled

Postby robbob » Tue Jan 26, 2021 6:58 pm

Grrrr I get a sense of deja vu coming on here - anyway on with the show

If you have any doubts you ideally want to drilldown into last years tax calculation

View account
tax years
2019/20
and click on the tax button

This will fully detail last years info - something along the lines of


unknown (- possibly £1290.24) first payment on acount
unknown (possibly £1290.24) second payment on account
unknown balancing payment possibly £2,739.19
total 2019/20 tax £5,319.67 - this amount looks correct !!

This begs the questions why it would say the following
£5,319.67 balancing payment due jan
Either this figure includes amounts paid and is misleading- or you have not made any payments on account or

If you get the drilldown details from clciking on the tax button mentioned above that should answer the question ref splits above.
Note before you click the "tax" button check how much has been paid towards this bill that will say what you have acctually paid on account (whether payments were due or not) and the total at the bottom should confirm what you still need to pay to clear down 19/20 - if this sum is less than £5,319.67 it looks like the "balacing sum due january" total is faulty. HMRC helpline may be able to claify the confusion.
Also I find how they calculate class 4 NI confusing. Why do they tax me @20% on £16,595 (which is my profit minus personal allowance) but they use a figure of £20,463 to work out my class 4 national insurance, why do they use a different figure and not £16,595.
Thats just how it works
You have £12.5k before you pay tax but only £8,632 before class 4NI kicks in kind os a stealth tax scooping up "tax payments" baddged as "NI" when your income is below the persoanla lowance - both political parties play the stealth tax game

Ref the first and second payemnts on account due these will need to be paid in addition to the unconfirmed other amount. These amounts seem fine based on total tax bill ye 5/4/2020 of 5319.67. In summary have you made no payments on account or is hmrc telling you porkies?

kayanos
Posts:9
Joined:Thu Apr 24, 2014 2:29 pm

Re: Baffled

Postby kayanos » Tue Jan 26, 2021 10:46 pm

Thank you so much for taking the time to reply, you've helped a lot.

Looking into last year's return I didn't make the 2nd payment on account of £1,290.24 and it says I owe that right now.

kayanos
Posts:9
Joined:Thu Apr 24, 2014 2:29 pm

Re: Baffled

Postby kayanos » Tue Jan 26, 2021 11:02 pm

I had a look at the tab that shows where the money went, and unlike previous years, none went towards a balancing payment and only £19.11 went towards a second payment on account. So is my bigger bill this year due to me not paying enough last year ? (also the amount I put through this year has jumped from 20 k last time to 29 k this time).


27 Feb 2020 First payment on account due 31 Jan 2020 (from payment/credit GBP480.85) 335.75
12 Oct 2020 First payment on account due 31 Jan 2020 (from payment/credit GBP973.60) 954.49
12 Oct 2020 Second payment on account due 31 Jan 2021 (from payment/credit GBP973.60) 19.11
Total 1,309.35

robbob
Posts:3066
Joined:Wed Aug 06, 2008 4:01 pm

Re: Baffled

Postby robbob » Wed Jan 27, 2021 9:57 am

Ok so it looks like per hmrs you have paid the fisrt payment on account of £1290.24 - but only £19.11 of the second payment on account.

So total bill 5139.67 and you have paid 1309.35 so 3830.32 to pay to settle 19/20 and then also 1st payment on acount as previously mentioned

If you have any doubts i would ring hmrc helpline to confirm - payments can easily me allocated to wrong period - if that is the case it would most likely be shoing up that you had paid something towards your 2020/21 year - so click in that year to check nothing is shoing as having been paid (only 1st payment on account for 20/21 uis due 31/1/21)
last year I paid £1290.24 x 2 payments on account (I believe these are deducted from my balancing payment for this year correct?)
The worry here is that you said the following - so if this is true something has gone wrong - so look at the payments received section check both payments have been made - and see what they have been allocated against - if hmrc totals are correct its most likely part of what was due to be paid last januarty to clear ye 5/4/19 tax you may have thought you wree paying towards ye 5/4/20 = - mentally you shoudl always split january tax payments into two and make notes as to what the elements are for each year - for some reason many people last year didnet pay what they should have last january and due to covid hmrc didnt chase many till possibly even october time - so anyone who isnt 100% on the ball could still have uknowingly been paying older tax - the dleayed payments on account (19/20) have confused the heck out of everyone too add to the problem !

kayanos
Posts:9
Joined:Thu Apr 24, 2014 2:29 pm

Re: Baffled

Postby kayanos » Wed Jan 27, 2021 2:25 pm

Thank you so much, I understand how they calculate the bill now. At first, its so confusing but once it's explained the penny drops so to speak.

Originally I thought I paid both payments on account, but in fact, I only paid 1 and a tiny bit after following your instructions to check my previous bill.

Thanks for explaining the mechanics of how to work out the bill. I might end up becoming an accountant at this rate lol.


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