Tax Returns

I'm struggling with Tax code - when earning over £100,000 in a tax year you start to lose your £11,000 of tax free earnings. I thought that Pension contributions offset this but apparently not? Anyone got any advice?

I'm the last person to ask on this, but my understanding was that pension contributions were taken from your salary before you pay tax on the figure, so you gain tax relief on both the amount of the pension payment, and you get taxed on a lower total figure - again a benefit.

Should I pay voluntarily pay £56.00 of Class 2 NICs?

I thought it was the Class 4s that were voluntary...
anyway - I do, it's not much, and it helps towards getting a pension.

Should I pay voluntarily pay £56.00 of Class 2 NICs?

Depends on your age and your existing NIC record. You need to go through the rules to see what kind of pension entitlement you're trying to gain and how many years of NICs are needed to qualify for it.

I'm 29 and I checked my NIC record a few months ago. I had less than 5 years that I have paid enough NI from when I was PAYE and a few years that also had options for voluntary pay. I worked in the US as a US citizen for 5 years so have missed paying a lot of NI in the UK during my twenties.

I only ask as I have been prompted to answer yes or no as I am doing my self assesment. Can I say no and I have upto 6 years to pay NI contributions for a particular financial year? (as you do with PAYE).

As a yoof (i.e. born after 1951) but not so young that you don't have a NIC record before 2016, I think you will be looking at the New State Pension, which only needs 10 qualifying years of NICs. You also have another 40 years to work, so you'll have plenty of time to accrue loads of years of NICs even if the lying bastards change the rules again. Obviously, IANAL, but it doesn't seem likely that you're going to gain anything by paying a small amount of voluntary class 2 unless you expect to neither pay mandatory NICs nor gain credits for the next four decades.

Can I say no and I have upto 6 years to pay NI contributions for a particular financial year?

Yes, you can catch up later with class 2, so you don't have to do it right now. I did back in the 90s, and as it turns out it was money down the drain :)

Cheers for the help. My 2017/18 year has been a lot better so I will have to pay mandatory NICs.

Perfect! I will just select 'no' then and get this self assesment submitted.

I started doing a bit of side work in July last year, it's a couple of times a month at most and ain't loads of money, I invoice them a set amount for the day and they give my wife money. I'm guessing I should've already registered as a sole trader and need to do a self assessment by the coming December/January deadline for whatever I've earned up until this April? Have I forgotten anything obvious?

If you started in July last year then you don't need to do anything for January, the tax year runs until April, which is the 2017/18 year. The January return deadline this year is for the 2016/17 tax year. Just register and get on top of things sooner rather than later and you'll be far better off in the long run.

Yep, I meant December 2018 January 2019, just wanted to double check that's the right course of action.

Yeah that's right, a couple of things to be aware of (if you're new to self employed and might be unaware) is that the tax you pay depends on the tax you pay for paye and not treated separately i.e. the first 11500 of your self employed earnings is not tax free if you've already used the allowance in your paye job. Also if you owe £1000 in tax your bill will actually be £1500 as hmrc get you to pay 50% in advance for next year (half of the advance payment due on 31st Jan with the current tax bill and the other 50% in July) I had no clue about the payments in advance and the first return I did where I made a profit left me frantically trying to find an extra grand in a month. Sorry if I'm just telling you things you already know.

if you owe £1000 in tax your bill will actually be £1500 as hmrc get you to pay 50% in advance for next year

It's not technically in advance, since your January 2019 payment on account is tax on work done since April 2018.
Also if your outstanding tax for self employment is as little as that and you have an employment too, you can choose to have it taken over the year with your PAYE tax by having your code adjusted.

Also if your outstanding tax for self employment is as little as that and you have an employment too, you can choose to have it taken over the year with your PAYE tax by having your code adjusted.

This is good to know, my actual earnings are just over that amount at the moment, let alone the tax owed.

Already aware that my allowance will be already spent on regular PAYE stuff.

Of course it's a payment in advance, you are making it in advance of your tax calculation being made. The January payment is made on the assumption that you will earn the same amount as you did the previous year not actual earnings since April. You can also file and pay your tax on the 6th of April if you wanted to.

The January payment is made on the assumption that you will earn the same amount as you did the previous year

And you can tell them you're not going to make as much and they will reduce your payments on account.

It's only a payment in advance if your work is highly seasonal and you do less than half your annual profits between April and January.

Of course, all bets are off if your basis period isn't April to April 🙂

Well maybe our industries give us different perspectives, I work in film and my first few years were all over the place and I wouldn't call myself a seasonal editor 😉

At least they now only assume that your profit will be static from year to year, in the olden days they assumed that your profit would increase in line with your allowance so that your tax liability would be static 😐

In the olden days you could also get self certified mortgages too so I guess it wasn't all bad.

Noticed that I was paying in to NEST in my last work place can I claim that back on my Tax return? Can't find any info on it, and not had time to call.

Anything to reduce my bill

and they give my wife money

You're doing this bit wrong.

AAAAAAAAAAAAAAAAAAAAAAAHHHHHHHHHHHH

1 Attachment

It's honestly much better that way, I can't be trusted.