Tax free allowance

Hello Diane

Are you referring to the personal allowance which you do not have to pay tax on?Which is in the tax profile section,which is usually £11,850(though it can be different)

Kind regards

Emma

Hello, Emma.

Yes, exactly.  The assessment page totals up my income, subtracts my expenditure total to give the NP, so far so good, but then does not further subtract (or mention at all) the personal allowance before calculating the tax liability. It's not crucial - I still use an accountant to fully verify the figures/tax return but QB is supposed to offer an accurate guide.

Regards,

Martin (Diane's the wife :) )

Hello Martin:)

The figures you put into the tax profile do impact the Self Assessment section. The figure you put in box 47 for net profit is determined mainly by box 15 and 16. Were you expecting this to impact box 15?

Kind regards

Emma

Hello, Emma.

Thanks for response. I don't have the form open in front of me so I can't refer to the actual box/field numbers but I'd only expect the profit and allowances from one year to apply to that year i.e. whatever my liability was for 17-18 should not affect my liability for 18-19. There is no mechanism for telling QB when one's paid one's tax, so even if one were to enter last year's liability into one's QB tax profile, the software can't tell whether it's still outstanding and needs to be carried over to become a total owing, or has been paid.

But coming back to the original point - in any given tax year, if a pre-tax net profit after allowable expenses is x, then the taxable profit should be x-£11500(ish) shouldn't it (ignoring NI for these purposes)? As I originally mentioned, the £11500 isn't being deducted in the calculation to establish tax owing.

Thanks again for your thoughts.

Martin

 Hello again, Diane-1957.

Thanks for providing such detailed information of what happened to your tax return. I want to ensure the tax calculation for your expenses is correct.

You’re correct, the liability from 2017-2018 should not affect the current year. Since the transactions are not taxed to the correct account, we’ll have to review them and see how they are categorised.

Thus, categorisation of your data also affects how they are reported on the tax return. For this reason, I suggest reaching out to our Email/Chat Support Team.

To contact them:

1. Log in to your QuickBooks Self-Employed account.
2. Go to Help in the upper-right.
3. Click on the Contact us link.
4. Fill in Ask a question field, then select Search.
5. Choose Contact Us.

For future reference, I'm adding links with detailed information about Income Tax rates and Personal Allowances:

• https://www.gov.uk/income-tax-rates
• https://www.gov.uk/income-tax-rates/previous-tax-years

That should point you in the right direction. Keep me posted on how things go after contacting our support team. I want to make sure this is taken care of.

Hello Community Users! We wanted to add some clarification on the correct process for accounting for P45 income within Self Employed. It is correct you would record it in the tax profile however it would be the personal allowance section you would adjust as the PAYE would affect how much allowance you have left. If you have used up the allowance  you can amend the figure in that personal allowance section to zero. This will then mean the income tax is calculated correctly.  We've amended the previous post to have the correct process. Any questions at all please ask them here. Thanks