PAYE 6 Years on

Author
Discussion

Steffan

10,362 posts

230 months

Monday 14th January 2013
quotequote all
Ozzie Osmond said:
Puggit said:
lose your tax free allowance, essentially this creates a 60% tax rate for £100k-£112k.
Yes, there are some very aggressive "effective" tax rates where the allowances are being withdrawn. This is especially tough on pensioners where oldsters pay an effective rate of 30% tax on income between £25,000 and £30,000 p.a.

This whole concept of raiding savers and pensioners to make good the bankers' recklessness is a national disgrace.
Absolutely correct Ozzie. Again. Sadly the fraudulent activity by the bankers will never be either effectively investigated or stopped. I regret the fact that many people in the UK are now clearly above the law. Cronies of politicians who will always protect their buddies. Unfair unjust hugely damaging to the UK and wrong. Bur that is politics in the UK today

steveT350C

6,728 posts

163 months

Monday 14th January 2013
quotequote all
Puggit said:
Rude-boy said:
DonnyMac said:
Why are you doing a tax return if you're PAYE?
If you are 40% you have to, it's the law.
That's not quite true: http://www.hmrc.gov.uk/sa/need-tax-return.htm

Over £100k needs to, but not simple 40% earners...
Thanks Puggit!!!

This link is most helpful.

As is the other one.

Thanks again. I have been meaning to get this area of my life sorted for a while, now the earnings are up to 6 figures.

Edited by steveT350C on Monday 14th January 18:38

Eric Mc

122,236 posts

267 months

Monday 14th January 2013
quotequote all
Rude-boy said:
Eric Mc said:
Company directors do not automatically have to submit self assessment tax returns.

Like any other person, they only need to do so if they have income that needs to be taxed under self assessment.
Interesting as it is most certainly up there on the HMRC link the other poster provided but for some reason i would trust your advice over a bloody word HMRC says!

That said I also get a letter each year (or have for the last 3!) from HMRC telling me I have to so like a good boy I do. First year I owed them about 20p, last year they owed me about £200 and this year I owe them £70ish so all in I'm 'up' on them at the minute, and not a little unsmug that for once in my life I had filed before the month has even broken into the teens biggrin
HMRC often put statements on their website which are not supported by law. In this case they are technically incorrect to state that company directors have to submit tax returns. In many cases - if not most - they do. But, as I said, it's not simply because they are company directors. It's because they have income that needs to be taxed under the self assessment system.

To be honest, I usually advise my clients to register for self assessment when they become company directors because they may not know initially whether they will have to file a return or not, and it's best to get themselves set up just in case they have to.

Ozzie Osmond

21,189 posts

248 months

Monday 14th January 2013
quotequote all
It's great entertainment watching HMRC getting itself in a twist.

They want as much of the tax administration/collection as possible loaded onto employers (and some situations where workers are self-employed) so they can just sit back and watch the money roll in.

But they can't resist ever-increasing complexity and more and more special cases all of which demand a self-assessment form. So then they come back with their next trick and want you to file self-assessment online so they can just let the machine process everything and spit out a few cases for human review.

Which brings us back where we started. Namely an income tax system which is now so complicated that few people at HMRC are clever enough to understand it.

Deva Link

26,934 posts

247 months

Monday 14th January 2013
quotequote all
Eric Mc said:
Company directors do not automatically have to submit self assessment tax returns.
Is that a recent thing? A former HMRC employee sitting near me tells me they do.

Steffan

10,362 posts

230 months

Monday 14th January 2013
quotequote all
Ozzie Osmond said:
It's great entertainment watching HMRC getting itself in a twist.

They want as much of the tax administration/collection as possible loaded onto employers (and some situations where workers are self-employed) so they can just sit back and watch the money roll in.

But they can't resist ever-increasing complexity and more and more special cases all of which demand a self-assessment form. So then they come back with their next trick and want you to file self-assessment online so they can just let the machine process everything and spit out a few cases for human review.

Which brings us back where we started. Namely an income tax system which is now so complicated that few people at HMRC are clever enough to understand it.
I think the Revenue tardy approach to preventing or indeed effectively identifying or policing tax avoidance is the real key in this. The Revenue want all the work done by everybody else. Year on year the tax take will fall.

Taxpayers are becoming aware of the extent to which tax is avoidable. Unless the government realise that excessive taxation reduces the tax take not increases it, the levels of avoidance will become totally absurd. If indeed we are not already at that point.

Eric Mc

122,236 posts

267 months

Tuesday 15th January 2013
quotequote all
Deva Link said:
Eric Mc said:
Company directors do not automatically have to submit self assessment tax returns.
Is that a recent thing? A former HMRC employee sitting near me tells me they do.
It's been the situation since self assessment was instituted around 17 years ago.

The former HMRC employee is wrong. They do often assert this but there is no tax legislation that insists on this. For example, if you are a director of a dormant limited company and receive no income from that company, why on earth should you be obliged to complete a self assessment tax return - especially if your other income is not of a Self Assessment nature?

Many directors DO have to complete self assessments - but it is because of the nature of their income (as the legislation sets out) not because they are directors.

Haggleburyfinius

6,613 posts

188 months

Tuesday 15th January 2013
quotequote all
Steffan said:
Unless the government realise that excessive taxation reduces the tax take not increases it, the levels of avoidance will become totally absurd. If indeed we are not already at that point.
I think we are definitely already here.

There are whole swathes of society who don't even know they have to pay tax on profits earned (us smart, wonerful PHers will be incredulous that this is the case but I assure you it is). There are also whole swathes who do not wish to pay profits on earnings.

Almost every day I see people trading or doing business of some sort who I'm convinced HMRC don't know about....how could they though, realistically? I reckon it's probably far easier to fly under their radar than is believed.

Eric Mc

122,236 posts

267 months

Tuesday 15th January 2013
quotequote all
It absolutely is.

The advent of "Self Assessment" changed everything.

The Treasury decided it was far more cost effective for them to essentially "give up" on administering taxation in this country and more or less "privatise" the system by placing the entire onus on the taxpayer to -

a) know and understand the entire complicated UK tax code

b) know and realise the circumstances when they should self declare income

Self Assessment should never have been introduced without a complete overhaul and simplifiction of the UK tax code being carried out first.

Steffan

10,362 posts

230 months

Tuesday 15th January 2013
quotequote all
Eric Mc said:
It absolutely is.

The advent of "Self Assessment" changed everything.

The Treasury decided it was far more cost effective for them to essentially "give up" on administering taxation in this country and more or less "privatise" the system by placing the entire onus on the taxpayer to -

a) know and understand the entire complicated UK tax code

b) know and realise the circumstances when they should self declare income

Self Assessment should never have been introduced without a complete overhaul and simplification of the UK tax code being carried out first.
I entirely agree Eric. Such an approach requires joined up thinking by politicians. No real prospect of any improvement therefore, given the malcontents and ne'er-do-wells in politics today in the UK!

Tax avoidance and indeed tax evasion is becoming a big business in the UK. Indeed from everything I see it has become a really big business in the UK. Led, naturally enough by out scoundrel politicians.

Ozzie Osmond

21,189 posts

248 months

Tuesday 15th January 2013
quotequote all
Steffan said:
Taxpayers are becoming aware of the extent to which tax is avoidable.
Valid point IMO.

Eric Mc

122,236 posts

267 months

Tuesday 15th January 2013
quotequote all
It is so easy to avoid and evade tax now.

A lot of the "evasion" is almost accidental as many people who should really be "self declaring" their income or elements of their income are simply ignorant of their legal obligations under Self Assessment - or don't care.

Puggit

48,535 posts

250 months

Tuesday 15th January 2013
quotequote all
Ozzie Osmond said:
Steffan said:
Taxpayers are becoming aware of the extent to which tax is avoidable.
Valid point IMO.
Sadly on PAYE, less so.

Haggleburyfinius

6,613 posts

188 months

Tuesday 15th January 2013
quotequote all
Eric Mc said:
It is so easy to avoid and evade tax now.

A lot of the "evasion" is almost accidental as many people who should really be "self declaring" their income or elements of their income are simply ignorant of their legal obligations under Self Assessment - or don't care.
Serious question though..without being directly reported, how can HMRC find these folk? It's not as easy as one might think I'd bet.

Even if they do, it's not like they'll have records or anything?

Deva Link

26,934 posts

247 months

Tuesday 15th January 2013
quotequote all
Eric Mc said:
Deva Link said:
Eric Mc said:
Company directors do not automatically have to submit self assessment tax returns.
Is that a recent thing? A former HMRC employee sitting near me tells me they do.
It's been the situation since self assessment was instituted around 17 years ago.

The former HMRC employee is wrong.
Apparently that's your fault - you didn't say it was a dormant company! smile

Eric Mc

122,236 posts

267 months

Tuesday 15th January 2013
quotequote all
There are lots of other examples besides dormant companies. What about a director who has a gross salary from the company of £20,000 (i.e. he is a basic rate taxpayer), he has no dividend income, receives no taxable benefits and doesn't even reimburse himself from the company?

What would be the point in him having to submit a self assessment return.

Self Assessment is not supposed to be a fishing exercise carried out by HMRC. It is a legal obligation of the TAXPAYER if and when they have income or claims that can only be taxed or relieved properly through the submission of a self assessment tax return.

HMRC works on the principle that they EXPECT directors to complete self assessment returns. But that does not mean that every director HAS to.

emicen

8,606 posts

220 months

Tuesday 15th January 2013
quotequote all
Steffan said:
Ozzie Osmond said:
Puggit said:
lose your tax free allowance, essentially this creates a 60% tax rate for £100k-£112k.
Yes, there are some very aggressive "effective" tax rates where the allowances are being withdrawn. This is especially tough on pensioners where oldsters pay an effective rate of 30% tax on income between £25,000 and £30,000 p.a.

This whole concept of raiding savers and pensioners to make good the bankers' recklessness is a national disgrace.
Absolutely correct Ozzie. Again. Sadly the fraudulent activity by the bankers will never be either effectively investigated or stopped. I regret the fact that many people in the UK are now clearly above the law. Cronies of politicians who will always protect their buddies. Unfair unjust hugely damaging to the UK and wrong. Bur that is politics in the UK today
Please explain how bankers forced the Labour Govt to overspend their tax receipts creating an unserviceable defecit...?

Eric Mc

122,236 posts

267 months

Tuesday 15th January 2013
quotequote all
Bank bale out?

emicen

8,606 posts

220 months

Tuesday 15th January 2013
quotequote all
Public sector net debt at the end of November 2012 was ~£1080bn (68.5% GDP).

You are trying to suggest that is all attributable to bank bailouts?


Lets consider the reality of this article:

http://www.independent.co.uk/news/uk/politics/1638...

"Government support for Britain's banks has reached a staggering £850bn and the eventual cost to taxpayers will not be known for years, the public spending watchdog says today."

But thats not actual money spent is it?


Paid:
- £76bn of shares in Royal Bank of Scotland and the Lloyds Banking Group
- providing £40bn of loans and other funding to Bradford & Bingley and the Financial Services Compensation Scheme

Pledged:
- indemnifying the Bank of England against losses incurred in providing more than £200bn of liquidity support
- guaranteeing up to £250bn of wholesale borrowing by banks to strengthen liquidity
- insurance cover of over £280bn for bank assets.

So actual spend is ~£115bn, which it should also be remembered, is money spent on a tangible asset which can be sold on.

In 2011/12, public sector net borrowing was £121.6bn, viewed as a success as that was £4bn below prediction.

ringram

14,700 posts

250 months

Tuesday 15th January 2013
quotequote all
Scrap most of HMRC, most of the rent seeking accounting profession and all manner of unnecessary economic costs.
Move to a total VAT based system. 30% sales tax. No other taxes. Job done.