Tax rebate

[Johnboyle7]

Hi all, im new here, i have just been looking at my p45 from previous job which i was Paye.. Since then i have been self employed, was wondering since i had only made £9800 in my last paye job from april and had paid £1184 in tax, wether i would get that back since its not above the taxable amount ? Any help would be great

[jpcentral]

You don't give any dates but the process is that you complete a Self-Assessment tax return for the year. Details of your PAYE income and tax paid are entered along with information about your self employment profits (plus anything else which may be relevant). Your total taxable income is calculated and the tax due (and Class 4 NI) on your total income calculated.

From the tax due any tax already paid (eg tax via PAYE) is deducted. If the resulting figure is negative, you are due a tax refund and if it is positive you owe tax.

PAYE and self employment are not dealt with in isolation.

[nikkisizer]

Hi Johnboyle7,

We would not be able to determine this until the current tax year has ended, that being 05 April 2016.

At this point and once your self assessment tax return has been completed, the tax calculation would be performed also taking into account any taxable income from your self employment during the current tax year.

If a tax refund is due to you then it will be issued by HMRC.

As you are self employed and if you have not done so already, you will need to register for self assessment with HMRC as you will be required to file a self assessment tax return for the 2015/16 tax year.

Happy to help if required so if you need any further assistance please do not hesitate to contact me.

[Johnboyle7]

Hi guys thanks for your help, it was brom april until august, ans then i became self employed through cis.

On another note, i am starting a ltd company this week ehich will be laid through the cis scheme aswell, as far as i believe i can claim back the cis payments opat the end of the year and then the whole lot of this will go to corporation tax ? Thanks

[Johnboyle7]

Sorry for the bad spelling i am using a new phone

[jpcentral]

As a self employed person (individual), CIS deducted is part of the calculation and it seems most probable that you will be entitled to a refund.

For a Ltd company there is no automatic offset of CIS deducted against corporation tax. CIS is supposed to be resolved by deduction from PAYE tax and NI but if you are a director only company, it is probable that there will not be any PAYE tax or NI to offset the CIS against. You therefore end the PAYE year (5 April) with a credit on your PAYE (CIS) account and have to request HMRC to allocate this to the corporation tax account. Unfortunately this process can take quite some time, possibly up to 6, 7 or 8 months.

You might find yourself in a cashflow conundrum if your year end doesn't match. For example, your corporation tax year ends in November but your PAYE year ends in March (or 5 April). You will be able to request a refund of CIS deducted up to 31 March 2016 shortly afterwards, but that is only a part year. Your corporation tax for the year to November 2016 will be due by 31 August 2017, but you might not have received your CIS refund for the PAYE year to 31 March 2017 by that date. You will, therefore, be expected to pay corporation tax before receiving your CIS refund.

It is possible to persuade HMRC to not charge penalties and to show the PAYE payment as an earlier date but this usually involves contacting HMRC and being pestered by HMRC's debt collectors. It may be sensible to set your commencement of trading date to the end of December or even January.

You hopefully know that you will have to re register for CIS under the company UTR and advise anyone you are working for of the change. One of the commonest problems we get is someone operating through a Ltd company, but a contractor still using a sole trader UTR. Causes a lot of grief.

[Johnboyle7]

Hi thanks, yeah so basically, my dad is the director and im a shareholder, both paying ourselves a small wage each week and a dividend every month. So will i be paye again ? and the company will be cis? We are going to register with cis soon as poss. Our accountant did say something about november and we just dont know the full jist of it, as in with me using my car for work and claiming mileage, where does that money come from ?

[jpcentral]

If you've got an accountant you really need to discuss these matters with him or her. Letting your accountant explain the procedures and processes will achieve more in an hour than days of asking questions on a forum.