Self assesment - should i pay it?

[notescontractor]

Hi,

I have a ltd company and work as an employee to the company. I pay corporation tax and NI and tax on the salary that I get paid as a paye.

I have just been sent a self assesment tax bill for several thousand pounds and am not sure what this is for. I have spoken to my accountant however he is old and doesnt understand it either.

Could someone please explain why i should be getting a self assesment bill on top of my corporation and paye tax?

Many thanks

[Fresh Air]

Income tax still has to be paid on income falling within the higher rate of tax (income being salary + dividend).

This is not taken through PAYE.

Not wanting to be too harsh on your accountant, but this should be his bread-and-butter?!

[Sukuzov]

tax

Get yourself a new, fresh accountant who can 'account' would be my advice.

But maybe its the higher rate tax element of any dividends you may have taken over the £39K ish mark. (18%)

[Archangel]

Hi,

I have a ltd company and work as an employee to the company. I pay corporation tax and NI and tax on the salary that I get paid as a paye.

I have just been sent a self assesment tax bill for several thousand pounds and am not sure what this is for. I have spoken to my accountant however he is old and doesnt understand it either.

Could someone please explain why i should be getting a self assesment bill on top of my corporation and paye tax?

Many thanks

For the sake of argument, say your compamny turned over £100,000.

The company paid a salary of say £10,000, Employers NI of £1,200 and had accountancy fees of £800. Other expenses amounted to say £5000.

The company has then made a profit of 100,000 - 17,000 = 83,000.

It now has to pay corp tax on 83,000 at say 21% = 17,430

It now has 83,000 - 17,430 = 65,570 to distibute (or retain).

So it now pays its shareholders (you) a dividend (received) of £50,000.
so you have received

£50,000 net dividend which is £60,000 gross, plus a salary of £10,000 gross, = £70,000.

Your PAYE has been accounted for on your salary, and basic rate tax has been deducted from your dividend. However, because your dividend income has pushed you into the higher rate tax bracket you need to pay some more tax. This is reported to the Revenue via your self assesment form (otherwise how else would they find out?) and paid by you in two installments in january and july (the first installment is in advance (or "on account" as the revenue call it)) the 2nd is in arrears. When you send in your self assessment they deduct the amounts you have paid from the amount due and you make an adjustment payment (in january) or receive a refund for the difference. The amount on your self assessment decides the amounts you pay in the next year.

Clear?

[Lewis]

... I have spoken to my accountant however he is old and doesnt understand it either ...

[Alan @ BroomeAffinity]

Simply, if you earn upwards of circa £40,000 then you'll have SA tax to pay. But, if your accountant doesn;t undertsand it then there is a good chance that he hasn;t filed your SA return and therefore it could be an assessment and the actual amount due will be different (probably less but maybe more).

If your accountant can't tell you this then there's probably a h*ll of a lot else he doesn't know. Get a new accountant sharpish and get him to check it out for you. There are plenty who hang around here and there are others out there as well.