I would like to seek your advice on what I should do with my Self Assessment for Tax Year 2021/2022.
My situation is as follows:
The payroll service provider of my employer mistakenly used "Salary Sacrifice" in the pension calculation for Tax Year 2021/2022. The correct treatment should be "Relief At Source" as told by my employer. As such, my employer issued a revised payslip of Mar 2022 which includes all the net adjustments to reflect the correct the pension treatment as "Relief At Source". However, the revised payslip was just issued in Aug 2023 (months after the Self Assessment and Tax Payment deadline).
I am wondering how I can retrospectively file an updated Self Assessment for Tax Year 2021/2022 because I have already submitted that Self Assessment and paid the corresponding tax in Jan 2023. In the updated Self Assessment, I need to do at least two things: (a) revise the pension payment and (b) claim the tax benefit (above the base rate) due to changing the treatment from "Salary Sacrifice" to "Relief At Source".
Could you please tell me:
(a) How to do a retro filing of revised Self Assessment for Tax Year 2021/2022? Which forms and/or boxes that I need to fill in?
(b) Will this be treated as late submission of Self Assessment? What is the penalty?
Look forward to hearing from you soon. Thank you.
Thank you for the response. You mentioned "total deductions" in the formula. If I narrow down my question on the calculation of deduction due to (company's) pension, could you please confirm if Method A or Method B (or else) is correct? Thank you. JL
I am trying to calculate the net pay to be paid to the employee after deducting PAYE tax, NI and pension (5%). It seems to me that there are two methods of calculating the net pay. Could you please confirm whether one is correct? If none is correct, could you please point me to the correct method?
Below are the two methods that I heard from people around:
Gross salary income = S
Taxable income = S * 100%
PAYE = S * 100% * 35% (assume the effective tax rate applicable on the taxable income S * 100% is 35%)
Pension = S * 5% * 80% (20% tax relief at source; assume 5% pension contribution)
NI = S * 4% (assume the effective NI rate on the taxable income is 4%)
Net pay = S - S * 100% * 35% - S * 5% * 80% - S * 4% = S * 57%
Gross salary income = S
Pension = S * 5% (assume 5% pension contribution)
Taxable income = S * (100% - 5%) = S * 95%
PAYE = S * 95% * 32% (assume the effective tax rate applicable on the (lower) taxable income S * 95% is 32%)
NI = S * 4% (assume the effective NI rate on the taxable income is 5%)
Net pay = S - S * 5% - S * 95% * 32% - S * 4% = S * 60.6%
Much appreciate your quick feedback and confirmation. Thank you.
I did my first Self-Assessment last year for Tax Year 2020-2021 and already made two Payments On Account (one in Jan 2022 and the other in July 2022) which, as I understood, serves as prepayment for my tax payment for Tax Year 2021-2022.
Today, I have just completed filling the online Self-Assessment form for Tax Year 2021-2022. The system shows the calculation of the Total Income Tax Due for Tax Year 2021-2022 which, however, does not include any deduction due to the two Payments On Account paid in Jan 2022 and Jul 2022. Is it normal? When I make the tax payment online, will the net amount to be paid be automatically offset by the two Payments on Account? Please advise.
Look forward to hearing from you soon. Thank you very much.