Online filing Hmrc exclusion ID 70 personal allowances

[Lsp54]

Hello,
I am having trouble understanding an error message from my PTP software. This concerns an error in the HMRC calculations for online filing, not using the most favourable allocation of personal allowances.

My client has (say) dividends £55,000 and pensions £42,000. The tax return is all agreed but the PTP software is giving the error message. I can go ahead and file online anyway if I wish. The highest tax rate on the PTP calculation is the 32.5% on dividends.

Does anyone know in what way the tax office is getting this wrong? Is the advice to file on paper, asking them to allocate allowances in the most favourable way?
Any advice is much appreciated. Thank you.

[Lsp54]

Hello again,
I'm still looking at this problem and think I can see it now. It's about the £5000 nil rate band for dividends (I think). If the nil rate band is being applied to dividends which are in the higher rate tax band, HMRC are moving those dividends to the basic rate band. So the taxpayer doesn't enjoy that tax relief at the higher rate?

Apparently this can result in a higher tax bill. If anyone is getting this please let me know. Basic rate for dividends is 7.5%. Does this affect it? If the calculation comes back altered by HMRC can I appeal and correct it if I don't like it?

Thanks a lot.

[greybags1]

What tax liability figure is PTP giving you?

[Lsp54]

Hi, thanks for replying. The accurate figures are:

Divs foreign companies £2623
UK interest £1478
UK dividends £50326
UK pensions £42447 the PTP tax liability is £21771.55

Thank you very much.

[greybags1]

Have just run it through BTC and my tax figure is the same as yours with no exclusion warnings being thrown up.

[Lsp54]

Hi, thank you for running this calculation for me. If you have no exclusion error message it should be ok. I think it should be safe to file it online.
Many thanks for your trouble.

[robbob]

Here is the link which gives the full details - great stuff if you like your nested formula's

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/707897/2017-18-exc-indi-v1.pdf

Have just run it through BTC and my tax figure is the same as yours with no exclusion warnings being thrown up.

I have just tested BTC for 2 know exclusion cases including number 70 and rather worryingly the calcs are not flagging up the exclusions they should flag up - they are using the incorrect higher total of tax- oh b*******s.

this being the case it does look like there is a more favorable calculation available that will involve the paper route or filing online and asking hmrc to amend (if that is possible?)

[Lsp54]

Hello, so it might be safer to file it on paper and request that HMRC use the most favourable allocations for the tax calculation?

Thanks to everyone!

[SteLacca]

£21,649.30 tax.

It has's only allocated £1,575 against dividend income, whilst a better option is to allocate £2,553 against dividend income. WIth the £5,000 dividend nil rate band (it isn't an allowance) youu push more of the NRB divs into the HR, effectively saving tax at 32.5% rather than at 20%.

[Lsp54]

Hello again,
Thank you for this. I've decided to file online (if it goes through ok) and complain if the tax comes back higher. After much number crunching, I've decided any difference will be fairly small.
I do appreciate everyone's help.