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how much was your APN compared to what you earnt?

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    how much was your APN compared to what you earnt?

    anyone willing to disclose how much of an APN was issued to you compared to what you had earned?

    just to see what sort of a percentage HMRC are issuing.

    #2
    Originally posted by Rogiebear View Post
    anyone willing to disclose how much of an APN was issued to you compared to what you had earned?

    just to see what sort of a percentage HMRC are issuing.
    I don't think anyone will say but the figures I've heard are that HMRC assumes you are paying tax on the money as if you received it after tax.

    So assuming £25,000 in loans they won't be seeking £10,000 (£25,000*.4) but rather they will seek the £16,666 (£25,000/(1-0.4)-£25000) that you would have paid in tax to end up with an after tax amount of £25,000..

    Now I'm not 100% sure that that figure is correct but I've now posted it a few times on here and no-one has provided any evidence that this is not how HMRC do the calculations...
    Last edited by eek; 3 June 2017, 22:50.
    merely at clientco for the entertainment

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      #3
      Originally posted by eek View Post
      I don't think anyone will say but the figures I've heard are that HMRC assumes you are paying tax on the money as if you received it after tax.

      So assuming £25,000 in loans they won't be seeking £10,000 (£25,000*.4) but rather they will seek the £16,666 (£25,000/(10-0.4)-£25000) that you would have paid in tax to end up with an after tax amount of £25,000..

      Now I'm not 100% sure that that figure is correct but I've now posted it a few times on here and no-one has provided any evidence that this is not how HMRC do the calculations...
      so what do you reckon on loans of £37,000? don't really understand your breakdown sorry.

      Comment


        #4
        Originally posted by Rogiebear View Post
        so what do you reckon on loans of £37,000? don't really understand your breakdown sorry.
        Eek's got his calculation slightly wrong.
        Put this into Excel 0.4×(25000÷0.6) and you'll get £16,666.

        So if you swap £25000 for £37000, you'll get £24,666.

        Basically you are looking at £37000 before tax. HMRC considers your £37000 after tax (£37000 is 60% take home).

        Which may not be what you want to hear...
        "I can put any old tat in my sig, put quotes around it and attribute to someone of whom I've heard, to make it sound true."
        - Voltaire/Benjamin Franklin/Anne Frank...

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          #5
          I will add that the 40% figure is your worst case scenario and i used it because getting an actual figure that takes into account your personal allowance and the 20% band is too much of a faff. So it's possible, assuming that you had no other sources of income that year that the figure may be smaller.

          However, that figure is just income tax and there will probably be both national insurance and interest added to the total demanded.

          Which we know you won't want to hear at all.
          Last edited by eek; 4 June 2017, 06:13.
          merely at clientco for the entertainment

          Comment


            #6
            Originally posted by eek View Post
            I will add that the 40% figure is your worst case scenario and i used it because getting an actual figure that takes into account your personal allowance and the 20% band is too much of a faff. So it's possible, assuming that you had no other sources of income that year that the figure may be smaller.

            However, that figure is just income tax and there will probably be both national insurance and interest added to the total demanded.

            Which we know you won't want to hear at all.
            why the hell would they calculate it like that??

            couldn't you get a re calculated amount by submitting bank statements etc? so you get your true amount of tax owed and not a ridiculous over calculated number? surely people would be able to stand a chance of what is owed to HMRC then rather than not being able to pay.

            and is this the just on loans they calculate all this?

            and what would you of had to earn for the year to hit the 40% bracket?
            Last edited by Rogiebear; 4 June 2017, 13:04.

            Comment


              #7
              Originally posted by cojak View Post
              Eek's got his calculation slightly wrong.
              Put this into Excel 0.4×(25000÷0.6) and you'll get £16,666.

              So if you swap £25000 for £37000, you'll get £24,666.

              Basically you are looking at £37000 before tax. HMRC considers your £37000 after tax (£37000 is 60% take home).

              Which may not be what you want to hear...
              so im looking at £37,000 to pay back on loan amounts of £37,000

              Comment


                #8
                The above is what we would call a grossing up calculation.

                It says that to have £25,000 left after tax, you need to have started with £41,666 if your tax rate was 40%.

                For periods after 2011, if the above was correct, then you would need to build in the NIC effect.

                HMRC also insist these days that fees "paid" to a promoter should be regarded as income in some cases, adding to the net value you are deemed to have received.

                Given that tax and NIC have different levels over which tax/NIC bites/increases, the calculation can get a little more complicated.

                In reality, the several hundred APNs we've seen and dealt with are nowhere near as sophisticated.

                Instead, if your return said

                Salary received = £10,000.
                Personal Allowance = £8,000
                Taxable = £2,000
                Tax at 20% = £400

                And HMRC consider that you had £60,000 of loans, then the calculation becomes

                Salary received = £10,000
                Additional income = £60,000
                Personal allowance = £8,000
                Taxable = £62,000
                Tax at 20% on say £30,000 = £6,000
                Tax at 40% on £32,000 = £12,800
                Total tax = £18,800
                Tax paid = £400

                APN Value = £18,400

                Or 30.7% of the loans.

                Bear in mind that the APN is an ESTIMATE of disputed liability.

                If eventually a Court decides that the gross up calculation is better/correct, then expect to pay more.

                (Obviously I've not used actual personal allowances, rate boundaries, NIC, interest, etc. above. These can be got from official sources and I'm sure that pretty much everybody here can make a spreadsheet).
                Best Forum Adviser & Forum Personality of the Year 2018.

                (No, me neither).

                Comment


                  #9
                  Originally posted by webberg View Post
                  The above is what we would call a grossing up calculation.

                  It says that to have £25,000 left after tax, you need to have started with £41,666 if your tax rate was 40%.

                  For periods after 2011, if the above was correct, then you would need to build in the NIC effect.

                  HMRC also insist these days that fees "paid" to a promoter should be regarded as income in some cases, adding to the net value you are deemed to have received.

                  Given that tax and NIC have different levels over which tax/NIC bites/increases, the calculation can get a little more complicated.

                  In reality, the several hundred APNs we've seen and dealt with are nowhere near as sophisticated.

                  Instead, if your return said

                  Salary received = £10,000.
                  Personal Allowance = £8,000
                  Taxable = £2,000
                  Tax at 20% = £400

                  And HMRC consider that you had £60,000 of loans, then the calculation becomes

                  Salary received = £10,000
                  Additional income = £60,000
                  Personal allowance = £8,000
                  Taxable = £62,000
                  Tax at 20% on say £30,000 = £6,000
                  Tax at 40% on £32,000 = £12,800
                  Total tax = £18,800
                  Tax paid = £400

                  APN Value = £18,400

                  Or 30.7% of the loans.

                  Bear in mind that the APN is an ESTIMATE of disputed liability.

                  If eventually a Court decides that the gross up calculation is better/correct, then expect to pay more.

                  (Obviously I've not used actual personal allowances, rate boundaries, NIC, interest, etc. above. These can be got from official sources and I'm sure that pretty much everybody here can make a spreadsheet).

                  Ok, Interesting.

                  can you calculate my 2016/17 please and what id expect my APN to look like?
                  should i look to settle with HMRC?

                  salary £11k
                  loans £31k

                  thanks in advance.
                  Last edited by Rogiebear; 4 June 2017, 14:03.

                  Comment


                    #10
                    Salary received = £11,000
                    Additional income = £31,000
                    (Minus) Personal allowance = £8,000
                    Taxable = £34,000

                    Tax at 20% on say £30, 000 = £6,000
                    Tax at 40% on £4,000 = £1,600

                    Total Tax = £7,600 minus any tax you've already paid.

                    And only you can decide whether to settle with HMRC or not.

                    And I would suggest sorting out a spreadsheet for this yourself - you need to start taking a bit of responsibility to understand the basic arithmetic of this.
                    "I can put any old tat in my sig, put quotes around it and attribute to someone of whom I've heard, to make it sound true."
                    - Voltaire/Benjamin Franklin/Anne Frank...

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