FOUR ELMS BOOKKEEPING 01935 850807

Yeovil bookkeeper offering accounting services to small businesses in Wincanton, Sherborne, Langport, Somerton, Yeovil and surrounding areas of South Somerset and West Dorset.


Self-employed tax calculator

Using income tax rates applicable to the chosen tax year


NOTE: To reduce data entry error some fields shaded blue are disabled until a value is entered in main box above them.

       Please enter the tax year for which income tax is being assessed.


£ Enter trading profit for the accounting year here. Include here any rental income from holiday letting.
£ Add: disallowable trading expenses including depreciation.      List of disallowed expenses
£ Less: capital allowances claimed.      Summary of capital allowances available
£ Less: value of any trading loss b/f from last tax year.
£ Add: value of any trading loss incurred c/f to next tax year or relieved against other income this tax year.


£ Enter gross value of any employment income received during the tax year.
£ Less: payments out of employment income to approved pension schemes and GAYE payroll schemes.
£ Less: any trading income relieved against employment income.



£Enter property income for the accounting year. (Exclude any rent paid to cover expenses normally paid by tenants.)
£ Less: allowable expenses (excluding interest on property mortgages or loans) .      Summary of allowable property expenses
£ Less: enter interest paid on mortgage or other property loans.

Tick this box if you are claiming Wear and Tear Allowance (furnished accommodation only).

£ Less: any property losses b/f from last tax year.
£ Add: any property losses c/f to next tax year.


£ Less: Personal allowance for this tax year.

The default tax allowance for your chosen tax year is given in the box above. Adjust this value if your personal allowance (tax code) is different. Enter a negative value if you have a 'K' tax code

Tick this box if you want the calculator to automatically reduce the Personal Allowance for taxable incomes above the limit applicable to the tax year.


£ Enter net amount of bank interest or building society interest received during the tax year. (Don't include basic rate tax deducted at source).


£ Enter value of any other interest received gross.



£ Enter value of dividends received during the tax year. Do not include the 10% tax credit.



£ Enter value of contributions to any personal pension plan or Gift Aid during the tax year.


           



Total tax liability comes to:

£   Total tax liability (including tax deducted at source)
£   less: tax on bank interest deducted at source
£   less: dividend tax credits
£   less: PAYE tax deducted at source (if employed)
£   less: property interest tax credit (from 2017/18)
£   INCOME TAX PAYABLE UNDER SELF-ASSESSMENT

£    Class 4 National Insurance contribution payable on trading profit
£    Class 2 National Insurance contribution payable



NOTES ON THE USE OF THIS CALCULATOR

This calculator assumes that the trader is self-employed for the whole of the tax year. Class 2 National Insurance contributions are calculated for one complete year. Where a trader does not work for the whole tax year (as may happen when in the first tax year of self-employment) then the Class 2 National Insurance value will be too high.

The correct figure for capital allowances must be entered against trading profit otherwise the calculated tax liability will be incorrect.

The correct amount of trading loss or property loss brought forward from a previous tax year must be entered in the designated boxes otherwise the tax calculation will be incorrect

PERSONAL TAX FREE ALLOWANCE: Traders whose earnings are high may have a lower Personal Allowance. If what is known as the 'adjusted net income' for the year (i.e. taxable trading profit + employment income + taxable property income + gross savings interest + gross dividends received less gross contributions to Gift Aid and Personal Pension Plans(PPP)) exceeds 100,000 then the personal tax-free allowance will be reduced. For every 2 adjusted net income in excess of 100,000 the amount of personal tax-free allowance reduces by 1. If the amount of Personal Allowance entered for the calculation does not reflect this reduction then the calculated tax will be too low. Only if the checkbox below the personal allowance box is ticked will this calculator automatically adjust the Personal Allowance for incomes above 100,000. If the trader is aged over 65 years the Personal Allowances are different. An enhanced Personal Allowance is available to traders aged over 65 years but this reduces towards the standard Personal Allowance where adjusted net income exceeds 24,000. If this calculator is used for a trader aged over 65 years the adjusted Personal Allowance will have to be worked out separately and entered in the Personal Allowance box.

Where personal allowances are reduced by the calculator for adjusted net incomes over 100,000, this reduction will not apply to the PAYE tax calculation. PAYE tax deducted at source from employment income is calculated on the basis of the original personal allowance entered by the user. It is assumed that reductions of personal allowance are done retrospectively after the end of the tax year. If this assumption is incorrect then this calculator will underestimate the PAYE tax paid and overestimate the balance of tax owing payable under self-assessment.

The amount of personal allowance available to an individual in a tax year is indicated by the tax code assigned to that person. If the tax code begins with the letter 'K' then taxable income will exceed actual income: there is, in effect, a negative personal allowance. In this case a negative number must be entered in the Personal Allowance box, otherwise the calculated tax due will be underestimated.

RENTING A ROOM IN YOUR OWN HOUSE: If you are letting a room in your own home under the 'Rent a Room' scheme then until the 2016/17 tax year the first 4250 of rent was tax free, unless you opted to have the rental income taxed under the normal regime.  In the 2016/17 tax year this tax free allowance increased to 7,500 per year.  However no Wear and Tear Allowance nor other expenses may be claimed against rent if you claim this tax free allowance: all rent in excess of the tax free allowance is treated as taxable income. In this case simply enter the figure of rent less the tax free allowance in the main Property Income box. Alternatively enter the total amount of rent in the main Property Income box and enter the applicable tax free allowance in the box below as an allowable expense.

WEAR AND TEAR ALLOWANCE: Wear and Tear Allowance only applies to furnished let properties and only for 2015/16 tax years and earlier. Starting in April 2016 landlords must calculate the actual replacement value of old discarded furnishings in let properties. Details of allowable expenses available from April 2016 are found here. The value of Wear and Tear allowance against property income is calculated from the figure in the main Property Income box. This value should not include any rent to cover expenses such as council tax or utilities that are normally paid by the tenant rather than the landlord. If such rent is included in the main box figure, then the value of Wear and Tear Allowance calculated will be too high.

INTEREST PAID ON PROPERTY LOANS OR MORTGAGES: From April 2017 the full amount of interest paid can no longer be offset against profits from a property business. During the 2017/18 tax year only 75% of the interest is directly claimable as expenses, in 2018/19 this proportion falls to 50%, in 2019/20 it will be 25% and then fall to 0% from 2020/21 onwards. Interest expense not deductible from profits will instead attract a tax credit calculated at the basic rate of interest. This will reduce the tax relief available to landlords with large profits who pay tax at the higher rates but will leave basic rate taxpayers unaffected. Allowable expenses for 2017/18 are found here.

INTEREST RECEIVED ON SAVINGS: Bank or investment interest must be separated into that received gross and that received with basic rate tax deducted at source (as usually happens with interest on bank and building society accounts). The two categories of interest must be entered separately into two different boxes designated for these categories, otherwise the calculation of tax liability will be incorrect

DIVIDENDS: The value of dividends received entered in the dividends box must be the amount actually received. If a gross figure with the tax credit included is entered in this box for tax years before 2016/17 then the tax liability will be overestimated. In 2016/17 dividends tax credits were abolished so the amount received is the gross amount. In this year up to 5,000 could be also received by anyone tax free. 

ACCOUNTING YEAR: Trading profits and Property income are those for the accounting period assessable in the chosen tax year. This accounting period could end at any time during the tax year. However employment income is that earned between April 6th at the start of the tax year and April 5th at the end of the tax year..

TAX DEDUCTED AT SOURCE: Deduction of tax at source on interest ceased in the 2016/17 tax year.  Up to 1,000 interest can be received tax free by anyone regardless of their other income.
Further details are here (opens in new window):   Change to tax on interest in 2016

Actual PAYE tax on employment income may differ from the value calculated here on account of taxable benefits in kind received, salary sacrifice arrangements, bonuses or other one-off payments or deductions made by an employer.

Rounding of values in the software algorithms may cause the tax payable to differ by a few pence from alternative computations using the same input figures.

This calculator should not be used to calculate tax for any other tax year than those available for selection from the drop down menu at the top of this page.

This calculator requires correct input figures in order to generate a correct tax liability

This calculator is only intended to give a calculation of income tax and National Insurance subject to the above conditions. Four Elms Bookkeeping accepts no liability for the use of output generated by this calculator.

For help with self-assessment tax contact Four Elms Bookkeeping.

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