2017/18 tax return query

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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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By Tim Vane
12th Apr 2018 19:08

I suspect your software is correct but your maths is wrong.

How do you make £55000 minus the PA fall below £38500?

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By Wanderer
12th Apr 2018 19:27

OP you need to give your calculations.

I'm guessing that you haven't properly understood the £5,000@0% dividend band.

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Replying to Wanderer:
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By Adam12345
12th Apr 2018 19:41

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?

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Replying to Adam12345:
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By Matrix
12th Apr 2018 20:17

Or taken a lower dividend.

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Replying to Adam12345:
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By Accountant A
12th Apr 2018 21:12

Adam12345 wrote:

I'm guessing your client should've made gross contributions of £10,000 ...

Surely max. relievable contribution are 100% of his earnings - £8,160?

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Replying to Accountant A:
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By Adam12345
12th Apr 2018 21:58

Yes. You’re correct, just trying to illustrate the point.

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Replying to Adam12345:
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By Accountant A
13th Apr 2018 00:58

Adam12345 wrote:

Yes. You’re correct, just trying to illustrate the point.

Ah, OK.

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By Ruddles
12th Apr 2018 19:54

No - it’s a case of some tax training being required.

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PJ
By paulgrca.net
13th Apr 2018 13:22

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?

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By emanresu
13th Apr 2018 17:19

What is your, and your software's, breakdown of the tax liability?

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