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Tony Tax
Tony Tax, Tax Consultant
Category: UK Tax
Satisfied Customers: 15764
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I filed my self assessment return fro 2010/11 with a tax payable

Customer Question

I filed my self assessment return fro 2010/11 with a tax payable of £4613.32
I filed my self assessment return fro 2011/12 with a tax refundable of £1702(tax charged £5773 less tax allowance of £7475)
I filed my Self assessment tax return fro 2012/13 with a tax refund of £3040(tax charged £5065 less tax allowance of £8105)

The tax office technically owes me £129 but unfortunately they are not creditting me with the tax allowances, they are demanding £4613 plus penalties

Is this right?
Submitted: 3 years ago.
Category: UK Tax
Expert:  Tony Tax replied 3 years ago.

Hi.

The personal tax allowance is not used as a straight deduction from the tax liability as you appear to have used it. The tax is calculated after the personal allowance of £7,475 for 2011/12 or £8,105 for 2012/13 is deducted from your income.

The tax allowance of £7,475 for 2011/12 is worth £1,495 in tax terms for a 20% taxpayer and £2,990 for a 40% taxpayer with an income of £100,000 or less.

The tax allowance of £8,105 for 2012/13 is worth £1,621 in tax terms for a 20% taxpayer and £3,242 for a 40% taxpayer with an income of £100,000 or less.

So, for example, if you had an income of £15,000 for 2012/13 you would deduct the personal allowance of £8,105 from it to leave £6,895 taxable. Tax on that at 20% would be £1,379.

I hope this helps but let me know if you have any further questions.