Underpayment of previous liabilities
Discussion
During 10/11 I underpaid tax - so on my self assessment I asked for it to be reclaimed during 11/12 via PAYE tax code due to the small amount (1/2k IIRC).
For various reasons, I probably won't cover that liability on PAYE for 11/12.
I assume this isn't a problem, and when I fill in the 11/12 Self Assessment I just input the previous liabilities along with tax paid to calculate the balance due?
I do the Self Assessment on TaxCalc so it does all the calculations for me, just can't remember the inputs required (and not near that PC at the moment).
For various reasons, I probably won't cover that liability on PAYE for 11/12.
I assume this isn't a problem, and when I fill in the 11/12 Self Assessment I just input the previous liabilities along with tax paid to calculate the balance due?
I do the Self Assessment on TaxCalc so it does all the calculations for me, just can't remember the inputs required (and not near that PC at the moment).
My philososphy is to segregate Self Assessment tax liabilities away from the PAYE system. The two do not make terribly good bedfellows as the timings are completely out of sync.
For example, if you submit your 2010/11 tax return now and show a liability of (say) £1,000, it would normally be payable in full by 31 January 2012.
However, if you ask for that liability to be collected through yoyur PAYE coding, HMRC MAY collect it through adjusting your 2011/12 coding or, not unusually, collect it through your 2012/13 coding,
Of course, by the time you are actually into the tax year 2011/12 you may have diswcovered you have an aditional self assesemnt tax liability for 2011/12, which HMRC may or may not collect through the 2012/13 or even the 2013/14 coding.
The whole thing cvan becaome an indecipherable nightmare.
I think it is best to bite the bullet and pay up on 31 January and leave your PAYE codings alone so that they are only collecting the PAYE tax for the year in which you are receiving the linked salary - and not collecting arrears of earlier tax years.
I know that doesn't answer your specific question but maybe in future you might be more inclined to pay the Self Assessment liability in full at the due date.
When completing Self Assessment tax returns, you MUST split apart on the return that part of any PAYE deducted on your salary in 2010/11 that realted to earlier tax years. And, if you have any PAYE being collected in 2011/12 that actually relates to tax year 2010/11, you need to show that too.
In extreme cases, I've seen PAYE being deducted from an individual that related to three distinct tax years.
For example, if you submit your 2010/11 tax return now and show a liability of (say) £1,000, it would normally be payable in full by 31 January 2012.
However, if you ask for that liability to be collected through yoyur PAYE coding, HMRC MAY collect it through adjusting your 2011/12 coding or, not unusually, collect it through your 2012/13 coding,
Of course, by the time you are actually into the tax year 2011/12 you may have diswcovered you have an aditional self assesemnt tax liability for 2011/12, which HMRC may or may not collect through the 2012/13 or even the 2013/14 coding.
The whole thing cvan becaome an indecipherable nightmare.
I think it is best to bite the bullet and pay up on 31 January and leave your PAYE codings alone so that they are only collecting the PAYE tax for the year in which you are receiving the linked salary - and not collecting arrears of earlier tax years.
I know that doesn't answer your specific question but maybe in future you might be more inclined to pay the Self Assessment liability in full at the due date.
When completing Self Assessment tax returns, you MUST split apart on the return that part of any PAYE deducted on your salary in 2010/11 that realted to earlier tax years. And, if you have any PAYE being collected in 2011/12 that actually relates to tax year 2010/11, you need to show that too.
In extreme cases, I've seen PAYE being deducted from an individual that related to three distinct tax years.
Edited by Eric Mc on Tuesday 8th November 10:02
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