Some basic questions regarding my first ever self-assessment
Discussion
Hi guys 
For the first time in my career, having worked my socks off for a decade in the same job, I ended up earning just over £100k in 2019/2020.
HMRC sent me a letter saying I need to file a self-assessment return, something I have never done. My financial situation is simple as I don't have any investments and any cash in a bank account will have earned peanuts in terms of any interest.
However, when filling in the online form, I came across couple things which threw me a bit, wondering if anyone might know.
1. I received an SA380 letter in Nov 2020. This is typically posted to people who hadn't filed a paper return by 31 Oct, advising me that I need to file online. The letter contained my Unique Taxpayer Reference and said that I need to register so that I can receive an Activation Code. I requested an activation code in early Dec 2020 but have not received one. Odd thing is that I was able to fill the online self-assessment via the www.gov.uk site without any Activation Code. Do I need the activation code in order to submit the return? Will I be asked for it at the last step or have I somehow managed to create a return without it and this will create a problem for me in the future?
2. I contributed around £2k into a pension scheme (my employer also contributed). I understand that as a higher rate taxpayer, I may be entitled to higher rate tax relief on my contributions. However, in the online self-assessment return, it states:
"Did you make contributions towards a personal pension or retirement annuity? This does not include payments you make to your employer's pension scheme, which is deducted from your pay..."
So the question is where do I state my pension contributions in the form?
3. There is s section on underpaid tax. For 2018/2019, HMRC wrote to me saying I owed them around £200. For 2018/2019, my tax code increased from 1028L to 1043L.
However, the online guidance note state:
"If your 2018 to 2019 tax code was reduced during the year [mine did not, it went up!] because of a change in circumstances, you may not have paid enough tax. Look at your 2018 to 2019 PAYE Coding Notice. If it includes the message 'our estimate of the underpayment for the earlier part of the year is £xxxxx' then this amount is automatically shown on your return..."
I don't have such wording, but as mentioned above, I underpaid by £200 as per their letter. Is this the figure I should stick into the underpaid tax section?
Thanks in advance to anyone who might be able to help, its tedious, I know!
For the first time in my career, having worked my socks off for a decade in the same job, I ended up earning just over £100k in 2019/2020.
HMRC sent me a letter saying I need to file a self-assessment return, something I have never done. My financial situation is simple as I don't have any investments and any cash in a bank account will have earned peanuts in terms of any interest.
However, when filling in the online form, I came across couple things which threw me a bit, wondering if anyone might know.
1. I received an SA380 letter in Nov 2020. This is typically posted to people who hadn't filed a paper return by 31 Oct, advising me that I need to file online. The letter contained my Unique Taxpayer Reference and said that I need to register so that I can receive an Activation Code. I requested an activation code in early Dec 2020 but have not received one. Odd thing is that I was able to fill the online self-assessment via the www.gov.uk site without any Activation Code. Do I need the activation code in order to submit the return? Will I be asked for it at the last step or have I somehow managed to create a return without it and this will create a problem for me in the future?
2. I contributed around £2k into a pension scheme (my employer also contributed). I understand that as a higher rate taxpayer, I may be entitled to higher rate tax relief on my contributions. However, in the online self-assessment return, it states:
"Did you make contributions towards a personal pension or retirement annuity? This does not include payments you make to your employer's pension scheme, which is deducted from your pay..."
So the question is where do I state my pension contributions in the form?
3. There is s section on underpaid tax. For 2018/2019, HMRC wrote to me saying I owed them around £200. For 2018/2019, my tax code increased from 1028L to 1043L.
However, the online guidance note state:
"If your 2018 to 2019 tax code was reduced during the year [mine did not, it went up!] because of a change in circumstances, you may not have paid enough tax. Look at your 2018 to 2019 PAYE Coding Notice. If it includes the message 'our estimate of the underpayment for the earlier part of the year is £xxxxx' then this amount is automatically shown on your return..."
I don't have such wording, but as mentioned above, I underpaid by £200 as per their letter. Is this the figure I should stick into the underpaid tax section?
Thanks in advance to anyone who might be able to help, its tedious, I know!
Aliblahblah said:
The letter contained my Unique Taxpayer Reference and said that I need to register so that I can receive an Activation Code. I requested an activation code in early Dec 2020 but have not received one.
IIRC the Activation Code is, somewhat quaintly, supposed to arrive by post. There's been a lot of holidays since early Dec and Mr HMRC does like to move at a gentle pace.Heh heh.
For the OP - if your employer deducts pension contributions they go off your pay BEFORE any tax is charged, so there's nothing extra to reclaim whichever tax band you're in.
If you've made any separate contributions (stand-alone) you'll have had 20% tax relief and be reclaiming anything further through the self-assessment process.
Yes, many people will boost their pension contributions (if they have headroom) to keep clear of the >£100k tax band of an effective 60% rate.
You should find it all remarkably simple once you've been "Activated".
For the OP - if your employer deducts pension contributions they go off your pay BEFORE any tax is charged, so there's nothing extra to reclaim whichever tax band you're in.
If you've made any separate contributions (stand-alone) you'll have had 20% tax relief and be reclaiming anything further through the self-assessment process.
Yes, many people will boost their pension contributions (if they have headroom) to keep clear of the >£100k tax band of an effective 60% rate.
You should find it all remarkably simple once you've been "Activated".
rockin said:
Aliblahblah said:
The letter contained my Unique Taxpayer Reference and said that I need to register so that I can receive an Activation Code. I requested an activation code in early Dec 2020 but have not received one.
IIRC the Activation Code is, somewhat quaintly, supposed to arrive by post. There's been a lot of holidays since early Dec and Mr HMRC does like to move at a gentle pace.Thanks to all for the responses. I decided to have a go myself simply because I don't believe my affairs are particularly complex (no shares, investments, bonds or massive savings, just a salary and bonus).
With regards to the Activation Code, I wonder if me getting verified by the Government Gateway system has negated the need for the code? In other people's experience, does the code need to be entered to submit the final form?
Should my affairs get more complex in future years, it would probably be worth hiring a helping hand to assist in filling the return!
With regards to the Activation Code, I wonder if me getting verified by the Government Gateway system has negated the need for the code? In other people's experience, does the code need to be entered to submit the final form?
Should my affairs get more complex in future years, it would probably be worth hiring a helping hand to assist in filling the return!
Aliblahblah said:
Thanks to all for the responses. I decided to have a go myself simply because I don't believe my affairs are particularly complex (no shares, investments, bonds or massive savings, just a salary and bonus).
With regards to the Activation Code, I wonder if me getting verified by the Government Gateway system has negated the need for the code? In other people's experience, does the code need to be entered to submit the final form?
Should my affairs get more complex in future years, it would probably be worth hiring a helping hand to assist in filling the return!
Seems they’ve suspended the need for an Activation code: https://edwardsaccountants.co.uk/hmrc-temporarily-...With regards to the Activation Code, I wonder if me getting verified by the Government Gateway system has negated the need for the code? In other people's experience, does the code need to be entered to submit the final form?
Should my affairs get more complex in future years, it would probably be worth hiring a helping hand to assist in filling the return!
thekingisdead said:
“ I love when taxpayers try to manage and understand their own tax affairs”
To be fair to the OP, it’s called “self assessment”, not “tax accountant assessment”
Yes - and a name that should be struck down by the advertising standards board for false representation.To be fair to the OP, it’s called “self assessment”, not “tax accountant assessment”
Just to prove how little confidence HMRC has in their own Self Assessment system, they are in the middle of a massive programme to abolish it. Elements of it are already gone.
rockin said:
Heh heh.
For the OP - if your employer deducts pension contributions they go off your pay BEFORE any tax is charged, so there's nothing extra to reclaim whichever tax band you're in.
If you've made any separate contributions (stand-alone) you'll have had 20% tax relief and be reclaiming anything further through the self-assessment process.
Yes, many people will boost their pension contributions (if they have headroom) to keep clear of the >£100k tax band of an effective 60% rate.
You should find it all remarkably simple once you've been "Activated".
That is not correct. Unless the contribution is done via salary sacrifice, very often the employee is only given basic rate relief at source and needs to claim the top up. Check with your payroll people exactly what tax relief you’ve been given. For the OP - if your employer deducts pension contributions they go off your pay BEFORE any tax is charged, so there's nothing extra to reclaim whichever tax band you're in.
If you've made any separate contributions (stand-alone) you'll have had 20% tax relief and be reclaiming anything further through the self-assessment process.
Yes, many people will boost their pension contributions (if they have headroom) to keep clear of the >£100k tax band of an effective 60% rate.
You should find it all remarkably simple once you've been "Activated".
Pensions are a minefield. There are too many different ways in which an individual can obtain tax relief.
For employees, this is even more complicated because their pension may be paid -
by salary sacrifice i.e. the pension contribution being deducted BEFORE tax and NI is calculated. If that is the case, the individual is getting all the tax (and NI) relief they can possibly get and there is nothing more for them to do regarding making claims
by deduction from "Net Salary" i.e the employee pays the contribution AFTER tax and NI has already been calculated. If the employee is a basic rate tax payer, they do not need to make any further claims for pension tax relief. Tax relief is automatically given by HMRC passing the 20% tax relief to the pension company directly. However, if the employee is a higher rate tax payer, the employee needs to notify HMRC (either by phone, by online adjustment to their Tax Account, or by submitting a Self Assessment tax return) and HMRC will refund to the taxpayer any higher rate tax relief they are entitled to. This tax refund can be paid directly to the tax payer or it may be given by an upward adjustment to their PAYE tax coding - so in effect they get the refund by paying less PAYE on their salary.
Individuals sometimes make additional lump sum payments into their pension schemes (usually referred to as a Free Standing Additional Voluntary Contribution - FSAVC). These automatically get the 20% tax relief but the individual will need to notify HMRC if they wish to obtain additional 40% tax relief using one of the techniques described above.
Finally, and especially if significant FSAVCs are being made, there are annual upper limits that can be made into pensions and there are also upper lifetime limits.
As you can see, it is all totally straightforward
For employees, this is even more complicated because their pension may be paid -
by salary sacrifice i.e. the pension contribution being deducted BEFORE tax and NI is calculated. If that is the case, the individual is getting all the tax (and NI) relief they can possibly get and there is nothing more for them to do regarding making claims
by deduction from "Net Salary" i.e the employee pays the contribution AFTER tax and NI has already been calculated. If the employee is a basic rate tax payer, they do not need to make any further claims for pension tax relief. Tax relief is automatically given by HMRC passing the 20% tax relief to the pension company directly. However, if the employee is a higher rate tax payer, the employee needs to notify HMRC (either by phone, by online adjustment to their Tax Account, or by submitting a Self Assessment tax return) and HMRC will refund to the taxpayer any higher rate tax relief they are entitled to. This tax refund can be paid directly to the tax payer or it may be given by an upward adjustment to their PAYE tax coding - so in effect they get the refund by paying less PAYE on their salary.
Individuals sometimes make additional lump sum payments into their pension schemes (usually referred to as a Free Standing Additional Voluntary Contribution - FSAVC). These automatically get the 20% tax relief but the individual will need to notify HMRC if they wish to obtain additional 40% tax relief using one of the techniques described above.
Finally, and especially if significant FSAVCs are being made, there are annual upper limits that can be made into pensions and there are also upper lifetime limits.
As you can see, it is all totally straightforward
Aliblahblah said:
With regards to the Activation Code, I wonder if me getting verified by the Government Gateway system has negated the need for the code? In other people's experience, does the code need to be entered to submit the final form?
I've only ever used my Government Gateway login.Aliblahblah said:
For the first time in my career, having worked my socks off for a decade in the same job, I ended up earning just over £100k in 2019/2020.
Congrats! The first thing I would say is be prepared for a bill.The first year I completed a SA I had to pay c. £5k of uncollected PAYE Income Tax / NI.
Not sure whether that was a payroll dept. or HMRC issue but it was a little annoying!
2 GKC said:
That would have been because your tax code included a personal allowance to which you were not (fully) entitled since it tapers over £100k.
Indeed. In subsequent years HMRC set up a functionality in the personal tax account to enter an 'estimated income', which I now adjust through the year to avoid this issue.1) if you are filling it in you don’t need the code
2) for pension, you need to find out what type of pension contributions you are making - is it salary sacrifice or not. If it is salary sacrifice, I believe your P60 salary figure will already have the contributions removed (because you “sacrificed” rhat salary already. If it is a more traditional arrangement paid from from gross salary, then you put it in the pensions section of the form as you can claim additional relief as a higher rate tax payer
3) for the underpaid tax, did they adjust your coding notice this year to compensate? Remember the years can be a bit confusing - so perhaps you had a lower allowance this year to pay it back. I’ve had this in the past.
2) for pension, you need to find out what type of pension contributions you are making - is it salary sacrifice or not. If it is salary sacrifice, I believe your P60 salary figure will already have the contributions removed (because you “sacrificed” rhat salary already. If it is a more traditional arrangement paid from from gross salary, then you put it in the pensions section of the form as you can claim additional relief as a higher rate tax payer
3) for the underpaid tax, did they adjust your coding notice this year to compensate? Remember the years can be a bit confusing - so perhaps you had a lower allowance this year to pay it back. I’ve had this in the past.
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