Thanks for reaching out, Dave. Let me provide some additional clarification to help ensure your tax calculations in QuickBooks Self-Employed (QBSE) accurately reflect your PAYE income so you can confidently file your Self-Assessment with HMRC.
Please note that QBSE calculates your self-employment tax based on your entered income and expenses. However, it doesn't automatically account for how much of your Personal Allowance has already been used by your PAYE employment.
Since the standard Personal Allowance is £12,570 for the current tax year, which is the amount of income you don't have to pay tax on. If you earn more than this, your income is taxed at various rates depending on the band it falls into (e.g., 20% basic rate, 40% higher rate). Here's an article about this for more details: Income Tax rates and Personal Allowances.
Because your total Personal Allowance applies to all your income (from both PAYE and self-employment), and your employer typically uses this allowance against your PAYE earnings, the tax calculations and box references in QBSE won't always line up exactly with what you see on your HMRC Self Assessment forms.
To get the most accurate tax calculation in QBSE, you’ll need to manually adjust your Personal Allowance within your QBSE Tax Profile. You can reduce it by the amount already used against your PAYE income. This helps QBSE estimate your self-employment tax correctly, as it will then calculate tax only on the portion of your allowance that's left, or on all of your self-employment income if your Personal Allowance has been fully utilized by your PAYE earnings.
Here's how:
- Log in to your QBSE account.
- Navigate to the Gear Icon.
- Select the Tax profile.
- Go to the Personal allowance amount field and type in the number.
You can also refer to this article for more details about the process: Set up your tax profile in QuickBooks Self-Employed.
When it's time to file your Self Assessment, use QBSE to get your total self-employment income and total allowable expenses. You'll then enter these summary figures into the corresponding boxes on the HMRC self-employment form (SA103).
As always, feel free to return to this conversation if you have any further questions about QuickBooks.
