I have a friend who is a teacher on PAYE she also owns property and I have done her tax returns to reflect her PAYE income and rental income, on the calculation the student loan repayments get added on to the calculation and taxed, is this double taxing or do student loan payments not get taxed under PAYE ?
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It sounds like you have not completed the return correctly. Check your entries on the employment form and the student loan section and ensure you have input any loan payments deducted by the employer.
It depends on the amount of rental income
The student loan repayments collected through PAYE understandably only take into account the PAYE gross income in the calculation. The payroll operator need not know anything about the rental income source.
The total obligation to repay student loan is based a percentage of the excess of total income over an annual limit. That total income includes PAYE and non-PAYE sources, although there is a de minimis limit on investment income below which it is disregarded (but above which it is taken into account in full).
You would expect that most of the required repayments have been collected through PAYE, and provided that those deductions were entered in the SA return they would come off the balance due for the year in the SA calc. But that can still leave a residue payable, if the rental income tops the disregard limit.
With kind regards
Clint Westwood
Surely you are not relying on the software to calculate the tax and SL payments? What did you calculate the totals to be yourself?
not tax
its student loan repayments
Would be the amount of repayments due on the rental income
Agree
Student loans aren't a tax. They reduce what you owe on your student loan.
Pay off your loan and your "tax" disappears.
You do not need software to calculate liability manually - pencil and piece of paper should suffice.
Unclear
You do not need software to calculate liability manually - pencil and piece of paper should suffice.
Indeed. Computers aren't smart - someone has to tell them what to do.
However, I note that it is often unclear on the software how the repayments have been calculated.
Pencil and piece of paper, on the other hand - quite the opposite.
Once again - it's not a tax.
I`m no magician – just a regular accountant
You try using a pen and paper on the HMRC on line portal, if it works you are a magician!
I think you are missing the point.
Irrespectively of what software you are using (3rd party or HMRC) the accountant still should be capable to check the calculation by hand to make sure it is correct.
The fact that software calculates the liability does not remove the need for accountants to understand how tax works and is calculated. I thought accountants are valued for their knowledge and ability to interpret data, not only for skill to input data in to software.
Always worth checking
http://www.hmrc.gov.uk/manuals/cslmanual/cslm16035.htm
The link shows how to calculate SL repayment – quite straightforward actually (never thought of it before).
Always worth to do a manual calculation if the sense check rings the alarm bell.
Example
I see that HMRC don't like to proof read. It states that the example will use a threshold of £16,910 but then uses the current year threshold of £17,335.
Agreed ...
... you should work out the answer yourself offline to make sure the online amount is the same or thereabouts.
Just posted this though, is something to be wary of, even if the P60 shows student loan deductions, if they changed jobs it won't include any deductions from the earlier employment!
https://www.accountingweb.co.uk/anyanswers/question/student-loanp45
You should also by the sound of it be getting the client to ensure the student loan deductions are accurately reflected on their student loan statement.
I think the OP assumes that the HMRC online portal uses some sort of unexplainable magic that no pen and paper can possibly replicate. I wonder if this sort of zombie compliance is why HMRC are so keen to push the digital agenda. Once everybody thinks the computer is always right and the answers are unfathomable to humans, the tax gap can be made to magically disappear.
Probably
I wonder if this sort of zombie compliance is why HMRC are so keen to push the digital agenda. Once everybody thinks the computer is always right and the answers are unfathomable to humans, the tax gap can be made to magically disappear.
Wouldn't surprise me.
The next step is the two line return.
"1. How much money is in your bank account ?
"2. Send it to us."
Or ...
Alternatively:Wouldn't surprise me.
The next step is the two line return.
"1. How much money is in your bank account ?
"2. Send it to us."
"Advance notice of direct debit: We are informed by your bank that yesterday the balance on your account was £12345.67. Please note that this has been debited to your account in settlement of your tax liability, further to our statutory direct debit authority."
With kind regards
Clint Westwood
I remember a client of mine logging in to SLC website and getting details of SL deductions for the year off there.
Or maybe that's what I'd like the system to be.