Using the QB SELF EMPLOYED Tax Calculation in the Tax Summary Report if you are SELF EMPLOYED only, not Employed & Self Employed.

sherylcookson · ‎May 05, 2022

Did anyone else think that QBSE would calculate your Income Tax if you are self-employed?

Their ad states "Quickbooks’ Self Assessment tax calculator helps you get a sense of how much tax you’ll need to pay this tax year on your self-employment income."

There's even a box on the Dashboard titled 'ESTIMATED TAX'.

When it's time to file my Self Assessment Tax Return, I use the Tax Summary Report to fill in my return - easy, however, the Income Tax on my report is always £0.

I used the online chat to chat to QB Support and they informed me that "the Income Tax will only show a calculation on the report & Dashboard if you are BOTH Self Employed & Employed" - who knew? There is nowhere on the earths internet I can find which informs users of this - is it actually true? If it is, why isnt the software called QBE&SE?

I tested the answer from support, by filling in my last years Tax Profile 'Estimated employment income' field and the 'Other income' field with a large amount to see the effect on the Tax Summary Report, and behold the Income-tax line was still £0.

Unfortunately, HMRC dont agree with my QBSE Report and say I do owe tax - Bah!

So, is it true? Is there anyone else out there who used QBSE and can get their Income Tax line on the Tax Summary Report to show anything higher than £0? Id love to hear from you :)

EmmaM · ‎May 11, 2022

Hello Sheryl, If you have used part of the personal allowance then yes it would be a case of adjusting the personal allowance amount to show what is left so that the calculation then works and the tax is then calculated correctly.

View solution in original post

JenoP · ‎May 05, 2022

Allow me to join you here and answer your questions about the self-assessment feature, sherylcookson.

We will calculate your self-employment taxes based on your business income, spending, allowable expenses, and tax profile. Aside from that, it also depends on:

How much of your income is above your Personal Allowance
Amount of income that falls within each tax band

This means that you don't need to be both self-employed and employed at the same time for the income tax to calculate.

The standard Personal Allowance for current tax year (from 6 April 2022 to 5 April 2023) is £12,570. This is the amount of income you do not have to pay tax on. You can read more details about this here: https://www.gov.uk/income-tax-rates.

To enter the correct amount for personal allowance, to to the Gear icon and click Tax Profile. Then, proceed to the Personal allowance amount field and type in the number. Here's an article about this for more details: QuickBooks Self-Employed UK Tax Profile Set Up.

Adding this articles as well for additional references in case you might need them:

You can always reply to this thread or post new questions if you need more help with QuickBooks.

sherylcookson · ‎May 06, 2022

Hi there JenoP.

Thank you for your reply.

I didn't think you had to be both employed & self-employed for the tax calcs to work, however, i was categorically told this was the case by 'Mary Joy' on Quick Books SE Chat yesterday eve - why would she tell me this? I even asked her to confirm it as I couldn't believe it.

I know how it is meant to work, as per your reply, thank you - but, it doesn't work for me - could I get support to look into why this is, please? Thank you.

I have attached 3 screenshots in one file of my QB Tax Profile & QB Tax Summary and also my HMRC Tax Return. It shows the figure which match and those which do not. I think QBSE doesn't seem to know ive earned £19 over my threshold, therefore owe £3.30 tax - I know its a tiny amount, but why is showing as £0 in QBSE? I want to get it correct so that it's right going forward. Thank you.

sherylcookson · ‎May 11, 2022

Hi JenoP,

An update on the issue:

The Tax Profile should work by taking the figure in the Personal Allowance Amount box to calculate Income Tax Due OR by taking the figure in the Personal Allowance Amount box and adding, or subtracting, the amount (if any) from the Marriage allowance Sent/Received box to get the adjusted threshold.

In my case that would be:

Personal Allowance: £12,570

Minus Marriage Allowance Transferred: £1,260

Theshold is now: £11,310

Income Tax Due: £4

QB is currently working like this for me:

Personal Allowance: £12,570

PLUS Marriage Allowance Transferred: £1,260

Theshold is now: £13,830

Income Tax: £0

In order to get my Income Tax to show as the correct £4 in the Tax Summary Report, i need to fill out my Tax Profile as follows:

Option A:

Personal Allowance: £10,050

PLUS Marriage Allowance Transferred: £1260

Theshold is now: £11,310

Income Tax: £4

OR

Option B:

Personal Allowance: £11,310

No Marriage Allowance Transferred: £0

Theshold is: £11,310

Income Tax: £4

Please can you confirm for me are Options A & B above workarounds ive found to the issue, or am I actually meant to be entering my allowance as a figure which has the marriage allowance taken off already?

QB, certainly doesn't seem to be calculating it quite right.

Thank you.

EmmaM · ‎May 11, 2022

Hello Sheryl, If you have used part of the personal allowance then yes it would be a case of adjusting the personal allowance amount to show what is left so that the calculation then works and the tax is then calculated correctly.

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Using the QB SELF EMPLOYED Tax Calculation in the Tax Summary Report if you are SELF EMPLOYED only, not Employed & Self Employed.