Tax bill 2016

[willia211]

Hello and please excuse my ignorance as im brand new to self assessment. To cut a long story short i have clearly made a mistake in my self assessment or at least i think i have. For the tax year ending 2016 i have received a bill for £1763.94 due to the tax man finding errors in my return, Basically i work for the local government in the area of children's services and my income is subject to PAYE, meaning i have little to do with it.

I have also purchased a property during this time and as a result made a small profit, once all work was carried out of £2.790 for the year. This is split between me and my business partner as we are at the beginning of hopefully buying / renovating several properties. So i split the profit down the middle and told the tax man i earned £1395.

Now here is where i have made my mistake. I failed to tell the tax man i was also paying PAYE from my day job, as i was already paying tax on this and combining my day job and the income from the property still left my income below £33K. Hence not in a new tax band. I also assumed that he would now i was paying tax by PAYE as its local government.

Hence i expected to pay tax on the £1395 extra. But i have received a bill of £1763,94, Can any one advise on this.
Equally my partner has not received any bill and he did virtually the exact same thing, As it was his advice in the first place.

Any advice would be appreciated.

[JK0]

Get an accountant.

[AndrewDod]

Does your business partner actually own half the property? Is he named on the land registry?

What "work" was carried out? It sounds shambolic -- you don't just declare a number to HMRC. HMRC generally explain the basis of their billing, so it should be obvious.

When you say your "income" was below 33K -- if by income you mean your pay cheques, you could be a higher rate taxpayer.

Did you submit a tax return? Why not?

[willia211]

Yes business partner owns half the property. Its in joint names with land register and re bank/ mortgage etc. Work on renovation included a kitchen, boiler all of which are documented in invoice and included in my self assessment return.The properties value is at 60K and rents £450, I have proof should i require it.
My combined income from day job and rental is below £33K, So i am not a higher rate tax payer.
I did submit a tax return for this year and years since with out problem. I think it may now be time to get an accountant for future years but in the short term i want advice re this tax bill, many thanx if you can advice further.

[jpkeates]

HMRC will have supplied a breakdown on their statement, they don't simply send a "bill".
If they have found "mistakes", they may include a fine.

You need to talk to an accountant.
There's no way of working out what's happened without a fairly forensic look at your financial life which you don't want to share here.

Also, you should have paid that amount by now, otherwise you may be fined.

[leaseholder64]

Renovation sounds like capital expenditure, which would be allowable against future capital gains tax, not against income tax.

The rules can be complicated, though.

[jpkeates]

HMRC aren't going to adjust the information given on a tax return.
They will either accept it or challenge it.

It's possibly that some of the money being requested is future tax which needs to be paid in advance.

[leaseholder64]

If they are covering future tax bills, that will be done on the coding notice, or as a payment on account. If it is a payment on account they will demand it in two parts, with only half of it being demanded by last Wednesday. It should be clear from their tax calculation how much is payment on account and how much is the balancing charge for underpaid tax in the actual year in question.

What HMRC generally try to achieve is that you should end up paying tax close to when the income arises, with only a small correction being made at the end of the year.

If they haven't corrected capital versus income, it will be important to make sure that is right, as you could end up with penalties for late corrections. I'm not an expert on the full rules, although I think, generally, if you buy a property in poor condition, with the intent of doing it up and then renting it out, the doing up is capital expenditure, whereas, if you do that with the intent of immediately selling, it is income expenditure.

[willia211]

Ok i have gone through the tax calculation issued with my bill. i have paid tax at basic rate via PAYE for my day job - this looks correct and is in line with my payslip etc from the time and has all been paid.

However the next line of the calculation adds student loan repayments - which when i say repayments i mean i have paid to the student loan company re my then student debt. Not as in a repayment to me.

This student loan repayment has been added to my income tax due, Meaning the difference between what tax i have paid via PAYE and the outstanding amount the tax man is now requesting includes this amount.

My bill or outstanding owed to the tax man is the student loan repayment Plus a small amount which is made up of fine/ interest /plus tax due to the inflated balance now my student loan repayment was added (as if it was an income).

So in that case it probably has nothing to do with my self assessment, I cant remember if their was a question re student loan on the return. But its money i have paid so i cant understand why it was now included on as some form of taxable income.

Do you think this is a simply clerical error or am i being stupid in that student loan is a taxable form of income. Even thought this was not an income at all. it was a payment i was making.
Urghh im lost simply writing this post. God knows how im gunner try and explain this to the tax man!! Plus they want their money within 30 days and any complaint needs to be in writing. Can anybody offer any advice.

[JK0]

Can anybody offer any advice.

Already did:

Get an accountant.

[jpkeates]

A student loan repayment is triggered by a level of income.
Which it is possible you have just achieved.
So the "tax" is some tax and some student loan repayment.

Accountant...

[Gordon999]

here is some info on the "gov website" : https://www.gov.uk/guidance/tell-hmr...our-tax-return

You can write a letter to Tax Office asking for explanation for your tax demand of £1763.

You can say the extra income for property work was £1395 and you expected to pay 20% tax = £280 + 9% for repayment of student loan = £ 126 . You have calculated the payment demand from HMRC should be £280 + £125 = £405. Offer to pay £405 on account .

[willia211]

in a nutshell its sorted i obtain the student loan breakdown for that year, forwarded it to hmrc and they were satisfied. so my tax bill is only 245 quid which has been paid. I have instructed an accountant for next year at a cost of 200.