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SA tax on company and PAYE

arvmina
Posts: 3
Joined: Fri Jan 12, 2018 2:56 pm

SA tax on company and PAYE

Postby arvmina » Fri Jan 12, 2018 3:09 pm

I would deeply appreciate some advice as my accountant recently submitted my SA TR declaring my small company income alongside my PAYE salary. He came back that I owe another £1,043.02 which I found shocking since I have paid my company tax separately and the tax from the PAyE (that is deducted automatically from my salary). The figures that were declared were: PAYE 45,884 (before tax of £8,148) and company net profit -dividends of £4,062. Does this extra tax of £1,043 seem logical and right to you?? I do trust my accountant but I can't keep wondering if there is is huge mistake there. Please help!

GlobalTaxAdviser
Posts: 544
Joined: Fri Dec 05, 2014 1:18 am

Re: SA tax on company and PAYE

Postby GlobalTaxAdviser » Fri Jan 12, 2018 4:10 pm

Whats the tax code on your payslip

arvmina
Posts: 3
Joined: Fri Jan 12, 2018 2:56 pm

Re: SA tax on company and PAYE

Postby arvmina » Fri Jan 12, 2018 4:35 pm

Hi,

it is 753L

many thanks

robbob
Posts: 2471
Joined: Wed Aug 06, 2008 4:01 pm

Re: SA tax on company and PAYE

Postby robbob » Fri Jan 12, 2018 6:40 pm

I have paid the tax from the PAyE (that is deducted automatically from my salary)
It's not always as simple as that for paye income - there can be any number of reasons why the paye code used doesnt collect the correct amount of during the the tax year - if this is the case the tax under over collected is simply added into the year end self assessment liability.

Your accountant is best placed to explain explicitly why the liability has arisen (presuming they are any good at their job)

questions i would start with are

was tax code cumulative?
what made tax code lower than the full allowance of £11,000

based on what you have posted the tax deducted at source doesnt look enough for the tax code - strangely though the actual tax deducted is more than should be due if it was as simple as 45884 salary 4062 divis and tax deducted at source of 8148 - so it seems to me that there is other relevant info missing

arvmina
Posts: 3
Joined: Fri Jan 12, 2018 2:56 pm

Re: SA tax on company and PAYE

Postby arvmina » Sat Jan 13, 2018 11:08 pm

Thanks so much for your reply. Apologies but I made a mistake in the year that the figures relate to. HMRC sent me recently notification that they would like me to do the SA TR for the last 4 years as i had not done them (by ignorance). So the figures I gave you are correct but relate to the year 2013-2014. My accountant explained that only since 2016 there has been a new legislation that any dividends below £5k are not taxed so I should not pay anything for 16-17 ( I had a similar income as in the 13-14). However, for 13-14 they are asking me to pay tax of £1000 plus. Hope that makes sense. It just feels so unreal to be asked to pay 20 plus% on top for a dividend of less than £5k, despite having paid my normal tax for PAYE and corporation tax for that year. Does this sound right to you with this new info?

robbob
Posts: 2471
Joined: Wed Aug 06, 2008 4:01 pm

Re: SA tax on company and PAYE

Postby robbob » Sun Jan 14, 2018 11:50 am

Hope that makes sense
Not particularly in the scheme of things in that are you saying there is two unrelated 1k issues or the older 1k issues is whta you are paying now ?

It makes sense that hmrc would be a pain and issue backdated tax returns , that have a habbit of doing that.
It is possible that the backdated tax returns could cause a liability - i would like to think you accountant could advise why in laymans terms - if there was no "new" income that was taxable (higher rate dividends) i would have expected that if you have previous owed tax via paye for one year then hmrc would have issued a P800 and previously collected this money - but with hmrc tax codes and P800's nothing is certain.
It just feels so unreal to be asked to pay 20 plus% on top for a dividend of less than £5k, despite having paid my normal tax for PAYE and corporation tax for that year. Does this sound right to you with this new info?
This is very unlikely to be the case presuming your total dividends are under 5k there probably is a different reason why you owe the money again your accountant should be able to explain in laymans terms whats going on. (2 situations where dividend income cause extra tax though is if your income breaches 50k ** and you have claimed child benefit or your income breaches 100k - you then lose personal allowance. Strictly speaking even then you are not paying tax on the dividend - its just causing the same extra tax nightmare that any other income would also generate in a similar manner)


I would recommend asking your accountant to explain exactly why the tax has arisen - pointing out the fact that dividend income under 5k doesnt normally trigger any specific tax charge, hopefully then you will have your answer.


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