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basic rate Income tax


j4the96
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Hi all

 

i have been paying basic rate tax on my earnings ( i am employed full time) for roughly 8 Years now. I was self employed for 3 years prior to this and didnt pay any tax, although i did register myself as self employed with the inland revenue but just kept on ignoring their letters and self assessment forms. (i know, i put it down to immatuarity) taking into account I have been paying over the odds with my tax for the past 8 years, would it be worthwhile getting in touch with the tax office or is there another way i could change my tax code ?

 

Thanks for all your help

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Sorry i forgot to add, when i was self employed i probably earned £12,000 a year tops. Since I have been working I probably have earned on average per year before tax deductions about £17,000 a year. On average I pay about £400 per month tax.

 

thanks

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If you think you have been paying over the odds on your tax for 8 years you should write to the Inland Revenue and tell them how much you think you should have paid. They will then do an assessment and refund any overpaid tax, I've done this several times when I wasn't working full time. I don't know why you think you should get your tax coding changed.

 

Using a rough calculation based on next years personal allowance I think you should be paying about 350 per month in income tax.

Lloyds TSB, Total Charges £900, Claim Filed for £1379 - Settled

 

Sainsbury's Bank Credit Card, Total Charges £90 - Settled.

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i think i should get my tax coding chnaged ebcause it shouldn't be BR1 (basic rate) as i only have 1 job. I need a tax code that gives me my due allowances. Would being self employed for 3 years prior to this and not paying any tax at all back fire on me and i might end up owing more ?

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Well in that case you should contact them and inform them you only have had one job for the last 8 years and the tax coding was incorrectly applied. You should get a refund of your missing personal allowance for the past 8 years if you have only had the one job for that time.

 

I don't know whether getting your tax coding changed will cause them to investigate your tax evasion but you can never be sure when that will raise its head again anyway.

Lloyds TSB, Total Charges £900, Claim Filed for £1379 - Settled

 

Sainsbury's Bank Credit Card, Total Charges £90 - Settled.

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Personally I think it's worth (a) owning up to your evasion as a "mistake" in your earlier years, and in the same letter (b) asking for an assessment of your tax contributions over the last 8 years, and asking them to offset the one against the other. Following that, anything owed to or by you can be recovered through an amended tax code. (This is how they prefer to refund/recover relatively small amounts). Honesty is the best policy with the tax man; continued failure to mention it puts you at greater and greater risk of prosecution and the longer you do it for the greater the penalty will be. If you come forward yourself, having realised your "mistake" it's extremely unlikely that they will prosecute.

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prosecution - jesus, never thought it might come to that !

 

Might be wise to leave things then, saying that i don't want to go on paying BR tax for the rest of my days !!!!

 

What other response would you suggest to someone who has openly admitted to fiddling the government out of (potentially) thousands of pounds? :confused:

 

Don't leave things; follow the course I suggested in my earlier post; couch it as a mistake and OWN UP. They are very unlikely to prosecute if you do this. HOWEVER, if your fiddling is discovered later without you owning up, you may well end up contemplating Her Majesty's pleasure for some considerable period.

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Surely after paying basic rate tax for 8 years, i must of well paid back the tax i evaded ?

 

Feel a bit dodgy about contacting the tax office now

 

Is there another way i could get round this without contacting them ?

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No. Tell them you've overpaid for 8 years. Tell them you omitted to declare the following earnings for tax between and : £figure due to an oversight on your part and you apologise profusely for the mistake. Could they please collect or refund any outstanding balance by an amendment to your tax code in the 2007/2008 financial year.

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p.s. you may well have paid it back - hence why I have specified "collect or refund" in the text above. However if you don't declare it they will not know will they, and you will NEVER get a refund. Also it carries a risk of Prison. I know which I would do...

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Thanks for you prompt replies. the problem i have is that i cant remember the exact amount I earned during those self employed years. i used to get self assessment forms every year, but that stopped about 8 years ago. I think the company i worked for whilst I was self employed said they would sort it out for me and get it wiped, not too sure, it was a while ago or i may of wishfully dreamt this. Could that possibly happen ? i mean get it wiped clean ?

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Not really sure... the only way to find out is to contact them and see; if you genuinely can't give any figures for those years tell them your best estimate of earnings (i.e. net profit) for your self-employed period. Start with how much you were paid per job/per hour, and multiply it up by how many hours you did per week, and how many weeks you worked per year. You should get an estimate of incomings this way. Then take off reasonable amounts for business expenses, (travelling, tools, materials etc). What you're left with is Profit. Call a REASONABLE amount of this profit "wages" and there's your taxable income. The rest would count as business running capital.

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TI think the company i worked for whilst I was self employed

 

You can't be employed by a company and be self-employed.

 

Unless, the company that your were contracted to withheld income tax; which they should have done if you did not produce invoices and/or tax certificate. This is even better for the 'confession' that StoneLaughter suggests as you can word it that you believe tax to have been paid by withholding for the time you were self-employed.

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