My client has made a personal pension contribution in 17/18 resulting in his basic rate band being increased to £38,500 however I don't believe my software is calculating the correct tax.
Income for 17/18 is as follows:
Salary £8,160
Divdends £46,840
Total taxable income £55,000.
The pension payment should ensure that all is income is taxed at the basic rate however the software doesn't appear to be doing this- is this a case of a paper return being required?
TIA
Replies (11)
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I suspect your software is correct but your maths is wrong.
How do you make £55000 minus the PA fall below £38500?
OP you need to give your calculations.
I'm guessing that you haven't properly understood the £5,000@0% dividend band.
Agreed.
OP has treated the £5,000 as tax free rather than taxable income at a rate of 0%.
I'm guessing your client should've made gross contributions of £10,000 to lift the BR band to £43,500 (after the personal allowance) rather than the £5,000 they have made.
Is your client feeling charitable?
I'm guessing your client should've made gross contributions of £10,000 ...
Surely max. relievable contribution are 100% of his earnings - £8,160?
More a case of you not having a clue as to what you are doing as this this is pretty basic stuff - do clients actually pay you for this?