The Salary Calculator

What Do I Need To Complete My Tax Return?

by Admin

[Sponsored post]

If you have earnings outside of PAYE, chances are you’ll need to file a tax return. This is an annual submission, due on the 31st January, that lets HMRC know your taxable income and how much tax you need to pay. If you fail to submit it or forget to pay your tax bill, you could face a fine.

So to ensure that doesn’t happen, we’ve asked Mike Parkes from GoSimpleTax to explain the tax return process and keep you on the right side of the taxman.

Get registered with HMRC

If you’ve been a sole trader or received income from other sources (like property) before, you may have already filed a tax return. If not, you’ll need to register for Self Assessment with HMRC.

Once complete, you’ll receive a Unique Taxpayer Reference (UTR) number that identifies you and enables you to submit a tax return. When your UTR arrives, you’re able to set up your Government Gateway account. It’s here that you’ll file your return (either manually or through software).

Bear in mind that it could take up to 20 days to receive your UTR, so be sure not to leave it too late.

Have all your documents to hand

Now you’re registered, the next step is to prepare the information you need to complete your tax return. This includes:

• Your UTR
• Your National Insurance number
• Employment income and benefits received during the year (forms P60 and P11D)
• Any income you’ve received as part of a self-employed business
• A total of any rent you’ve received
• Certificates detailing interest you’ve received from your bank
• Any income you’ve received from overseas
• Any income you’ve received as part of a partnership (one partner should also file a tax return for the partnership as a whole)
• Information about any dividends received
• All taxable benefits you’ve received from the state
• All capital gains you’ve made by disposing of assets
• Information about any Gift Aid payments you’ve made
• Details of any pension contributions (you may be able to claim some of this money back)
• Details of any tax payments you’ve already made this year

All of the above information only needs to refer to the tax year that you’re filing for. In other words, if you’re filing before 31st January 2021, the period will cover 6th April 2019 to the 5th April 2020.

Don’t forget your expenses

While it’s important to keep track of your income, it’s equally important to keep track of your expenses. Any expenditure you’ve incurred during the year may be allowable and used to lower your tax bill. Whether you’re self-employed or a landlord, HMRC have prepared lists of regular expenses you’d expect to see.

You won’t need to send any evidence with your tax return. However, it’s important that you keep your records safe for up to six years in case HMRC investigates your tax return.

Pay your tax bill

Once you’ve filed, HMRC will calculate your total tax liability. Obviously, if you file early, you’ll be aware of your liability well ahead of the payment due date, allowing you to manage your cash flow better.

There’s no legal requirement to file early though – both the tax return and any money you owe are due on 31st January following the end of the tax year.

This tax year, however, HMRC are allowing some Self Assessment users affected by COVID-19 to spread their tax bill over a period of 12 months. Users that file early will be able to determine how much they can pay right away, and then how much they’ll need to pay each subsequent month, using the government’s Time to Pay service.

You can check your eligibility and set up your payment plan by logging in to the Government Gateway. Alternatively, you can call the Self Assessment Payment Helpline on 0300 200 3822 and talk through your options.

That’s it! You’ve officially completed your tax return. Now to prepare for the next one…

About GoSimpleTax

GoSimpleTax software submits directly to HMRC and is the solution for self-employed sole traders and anyone with income outside of PAYE to log all their income and expenses. The software will provide you with hints and tips that could save you money on allowances and expenses you may have missed.

Trial the software today for free – add up to five income and expense transactions per month and see your tax liability in real time at no cost to you. Pay only when you are ready to submit or use other key features such as receipt uploading.

Tags: Employed and Self Employed, HMRC, income tax, national insurance, Self Assessment, self employed, tax rates

New – Job Support Scheme added

by Admin

Note: An earlier version of this post contained old percentages – the post was updated (on 22nd October 2020) to reflect new percentages

From 1st November 2020, the furlough scheme introduced by Chancellor Rishi Sunak is being replaced by the Job Support Scheme. This scheme is designed to encourage employers to bring employees back to work part time if possible. The Salary Calculator has been updated to allow you to estimate what effect this will have on your take home pay.

If you work 20% or more of your normal full time hours, some of your “missing” pay for the hours not worked is subsidised by the government. Your employer will pay 5% of the unworked hours, the government will pay 62% of the unworked hours, and the remaining third of unworked hours is unpaid. This does require your employer to pay you for work you are not doing, but the plan is to help people get back to work rather than losing their jobs. If you work a third of your hours, you will receive 77% of your normal pay – slightly below the 80% offered by the furlough scheme. The government contribution is capped at £1,541.75 per month.

To see what effect this might have on your take home pay, check out the Pro Rata Salary Calculator – you can either enter reduced weekly hours, or a percentage of your full time hours – just remember to tick the “Job Support Scheme” box to see what a difference it will make.

Tags: coronavirus, covid-19, income tax, job support scheme, Jobs, national insurance, Pay As You Earn, The Salary Calculator, unemployment

New – Maternity and Paternity pay calculations

by Admin

You may remember that a short while ago, I added a calculator for sick pay and unpaid leave. It was natural for me to consider the effects of maternity / paternity pay, too, as this can have a similar effect on your take-home pay – and Statutory Maternity Pay and Statutory Sick Pay are calculated in quite similar ways. I have now added this option to the maternity pay salary calculator.

You will notice that this is the same calculator – the Sick Pay Calculator has been expanded to include statutory parental pay as an option. If you will be taking some maternity or paternity leave, you can estimate the effect on your payslip by entering the details of your salary, days per week that you work, and how many days in the pay period you will be taking as leave. If your employer offers some of your leave at full pay then you don’t need to enter these days. If you are receiving some leave at 90% pay (you are normally entitled to this for the first 6 weeks of maternity leave) then use the % pay fields to handle those days. And for any days in the pay period that you will be receiving Statutory Maternity (or Paternity) Pay, currently £151.20 per week, use the Statutory Parental Leave field.

Important note! All calculations provided are estimates and indicative only. Different employers have different leave policies (for sick pay and for parental pay), they also calculate leave in different ways. You may not be entitled to statutory pay. The calculator does not know what you are entitled to, only what you have entered. If you are paid monthly, or have an irregular work schedule, Statutory Pay can fluctuate from pay period to pay period, which the calculator does not allow for. More information about maternity pay is available from Gov.UK.

Tags: HMRC, income tax, maternity pay, national insurance, parental leave, paternity pay, Pay As You Earn, sick pay, SMP, SSP, statutory maternity pay, statutory pay, statutory sick pay, The Salary Calculator

New tool for those thinking of retiring

by Admin

If you are thinking of retiring soon, you might be wondering what kind of effect taking your pension would have on your take-home pay. This is not quite as simple as it might sound at first – the deductions from your pension income will not be the same as those on your salary. For example, you might be paying into a pension with some of your salary, which of course you would not do with income from a pension. And National Insurance is not deducted from pension income, whereas it is deducted from your salary if you are below state pension age.

With this in mind, I have combined a few options from the Two Jobs calculator (which shows you the take-home pay if you have two income at once) and put them in the Two Salaries Comparison Calculator (which compares two incomes side-by-side). Now, you can enter different options for the two different incomes you are comparing (e.g. different bonuses or overtime) – and you can also tick a box on the “Additional Options” tab to indicate that one or other of the incomes is a pension. This income will then not have National Insurance deducted from it – so you can enter the details of your employment for the first income and the details of your pension in the second income, tick the box to say the second job is actually a pension, and the calculator will deduct NI only from the first income.

If you are thinking of retiring, or just investigating a new job which would have a different salary and different deductions, try out the Two Salaries Comparison Calculator.

Tags: income tax, national insurance, pension, Pensions, retire, retirement, The Salary Calculator

Receiving a pension AND employment income

by Admin

The Salary Calculator has had the Two Jobs calculator for a little over a year now. I have had a couple of people contact me and say that they haven’t been able to use it for their situation, which is that they are receiving one income as a pension but they have a second income from a job. The pension doesn’t have National Insurance deducted from it but the job does, and it wasn’t possible to reflect this in the calculator. However, this oversight has now been fixed!

On the Two Jobs calculator, the Additional Options tab now has two extra tick-boxes which you can use to indicate that either the first or second job is a pension (or indeed that they are both pensions). The calculator will then not deduct NI from the job that you say is actually a pension. On all other calculators, where you are only dealing with one income, you can just tick the “I do not pay National Insurance” box if this actually a pension.

Tags: Jobs, national insurance, Pay As You Earn, pension, Pensions, The Salary Calculator