Reply to: Self Assessment on other income (Property)

[northernladuk]

Why do you keep interjecting in a useful educational thread when you are adding no value. If you aren't interested, fook off and leave it alone!

For the same reason you posted this I guess.

Edit : Actually to add to this, this is a professional forum for people running their own business. If some muppet wants to come on here not even being bothered to research a tax year FFS and expect free advice from the accountants here they deserve everything they get!

[Kanye]

These questions are bordering on scary!

Why do you keep interjecting in a useful educational thread when you are adding no value. If you aren't interested, fook off and leave it alone!

[ASB]

LOL... Believe me no one has ever asked 'for the self assessment process is it from January to December,' before! I would wager he won't find that in ANY search.

I bet you checked though....

[northernladuk]

I think he's ill. No:

"here is the same question asked 14,523,647 times before"
"can't you find the search button"
"are you sure you are cut out to be contractor"

LOL... Believe me no one has ever asked 'for the self assessment process is it from January to December,' before! I would wager he won't find that in ANY search.

[ASB]

I get that a lot!

I think he's ill. No:

"here is the same question asked 14,523,647 times before"
"can't you find the search button"
"are you sure you are cut out to be contractor"

[ASB]

If you have salary, property income and dividends then you have no choice about how it's taxed. Your tax code is used against the salary and property income, then dividends are taxed last.

It does result in slightly more tax being paid (because the dividend top up is at 22.5% not 25%)

In this case taxing the dividends last gives 10,603 payable, plus the 505 on salary = 11108.

If the rental were taxed last we'd have

45125 (2,000 less) * .225 = 10153 + 2000 * .4 + 105 (the 400 standard) rate on 200 is saved) = 11058

But, of course there isn't a choice in the matter anyway.

[Clare@InTouch]

You must spread some Reputation around before giving it to northernladuk again.

I get that a lot!

[ASB]

These questions are bordering on scary!

You must spread some Reputation around before giving it to northernladuk again.

[ASB]

You said 72,000 dividends. This is 80,000 gross. So you have income of 90,000. This is 47,125 into the 40% band.

This will need a top up of 22.5% (not 25 because here we are already including the tax credit). = £10,603.

It's really easy to bung the numbers into a tax return on your on line account with HMRC. This will give you a nice neat calculation and breakdown. You don't have to file the return, just come back to it whenever you want.

[northernladuk]

Hi

£8,000 Salary and £72,000 dividends.
If I read correctly, 06/04/2011 to 05/04/2012 will be the tax date, and the property income will follow same schedule too, so if the property started to rent in May then you assess based on income from May 2011 till 05/04/2012 ? .

Thanks in advance.

These questions are bordering on scary!

[Clare@InTouch]

Hi

£8,000 Salary and £72,000 dividends.
If I read correctly, 06/04/2011 to 05/04/2012 will be the tax date, and the property income will follow same schedule too, so if the property started to rent in May then you assess based on income from May 2011 till 05/04/2012 ? .

Thanks in advance.

That's correct.

Say £10,000 in salary & property, then £72,000 in net dividends. That would be gross dividends of £80,000. So total income of £90,000.
Assuming a normal tax code, that would leave £47,525 in higher rates, which would be tax around £10,500.

Edit - plus the tax on property & salary as per ASB above.

[ASB]

For the purpose of calculating the income for the year 2011, which dates do I need to work with ?

Also in terms of the income, my understanding is as follows, I may be wrong please feel free to correct me.

Lets assume Joe Blogs is a contractor working though a limited company and make a gross takings of £80k.

He then decides to take a low salary of say £8k. In 2011 he lets a property making a profit of £2k. How much does Joe B pays to the tax man both on the property and also income from limited company. The most tax efficient option please.

Just knock 1 of the year numbers that Clare gave.

In terms of the question you ask. And I assume it is for the y/e April 2012, and I also assume that your have a standard code then you will have gross income of 10k.

Here's a really simple calculator. UK PAYE Salary Wage Income Tax Calculator 2012 UK. Updated for 2012/2013 inland revenue tax year. Calculate wages pension national insurance and student loan repayments online.

The tax due will be 505.

10,000.00 - 7,475.00 = 2,525.00 @ 20% = 505.

However it seems safe to assume you will also be taking some dividends. For basic rate taxpayers this involves no additional tax. For higher rate tax paxpayers it will involve a payment of 25% of the net dividend ( x 10/9) which falls into the higher rate band.

For the year in question Income Tax - Tax Rates 2011 / 2012

The basic rate band was 35,400. So once your income exceeds 42,875 additional tax will need to be paid of 25% of the net dividend.

The maximum dividend you can receive is going to be 32,875 including the tax credit = 29587.50.

e & oe

[platforminc]

For calculating income you need to look at the tax year - 06/04/2012 to 05/04/2013.

If you have salary, property income and dividends then you have no choice about how it's taxed. Your tax code is used against the salary and property income, then dividends are taxed last.

By £80,000 gross takings, what do you mean? £8,000 salary and then £71,000 in dividends? Or £80,000 sales?

Hi

£8,000 Salary and £72,000 dividends.
If I read correctly, 06/04/2011 to 05/04/2012 will be the tax date, and the property income will follow same schedule too, so if the property started to rent in May then you assess based on income from May 2011 till 05/04/2012 ? .

Thanks in advance.

[Clare@InTouch]

For calculating income you need to look at the tax year - 06/04/2012 to 05/04/2013.

If you have salary, property income and dividends then you have no choice about how it's taxed. Your tax code is used against the salary and property income, then dividends are taxed last.

By £80,000 gross takings, what do you mean? £8,000 salary and then £71,000 in dividends? Or £80,000 sales?

[northernladuk]

What does your accountant say? Not knowing your tax dates and the make up of your tax profile are pretty basic things.