Tax Calculation

Note: Prior to 2014, the Tax calculation was called the Plain Paper Calculation.

The Tax calculation is accessible from within the Current Working Figures, or from the Calculation button on the toolbar.

The Tax calculation will give a report of the client’s income and any losses, deductions or relief, to give a final amount of tax to be paid.

The Tax calculation will be produced for the year currently selected for the client. Generally this will be the previous tax year currently being worked on.

Current Year Computation

It is possible to produce a Tax calculation for the current tax year. Select the current tax year within the Annual Data Navigator, and then run the Tax calculation for the client either from the toolbar button, or from the Current Working Figures.

The computations will be made using the latest available Income Tax and Class 4 National Insurance rates and allowances for the current tax year, along with a combination of data that is already known and estimations for the client's data.

Note: The rates and allowances used are subject to change until the end of the tax year, so calculations may not reflect the final liability for the tax year.

The current year computation facility will allow you to:

• produce a projected liability for a client, where actual income information is available for the tax year before the end of that tax year. For example, if accounts for a sole trader with a period end-date during the tax year have been completed, you will now be able to produce a calculation of the liabilities that will arise from those accounts and advise your client when sending a copy of the accounts.
• produce a projected liability for a client, using either some or all estimated figures, in order to advise on ways in which to reduce that liability.

• perform tax planning exercises, in particular so that it is possible to predict the effects of certain events on a client’s tax liabilities, eg:

  • Where a client has a one-off receipt, e.g. a chargeable capital gain, lump sum payment from employment.
  • To calculate the effects of making certain types of payment, e.g. pension contributions, Enterprise Investment Scheme payment, Venture Capital Trust payment, Community Investment Tax Credit payment, Gift Aid one-off payment, relating back Gift Aid payments, Making a Gift of a Qualifying Investment.
  • Pro-active tax planning close to the end of the tax year, with a view to advising clients on ways in which to minimise their tax liabilities.
  • The effects of a self-employment ceasing on a certain date.
  • The effects of purchasing a capital asset qualifying for first year allowance.
  • The effects of a change of accounting date.
  • The effects of an income averaging claim.
  • The effects of accelerating a cash basis adjustment charge.

For such scenarios, it is likely that some estimated figures would need to be used.

Note: The posting facility in Business Tax is not available for Partnerships until after the end of the tax year. Therefore, current year computations for partners will need to be based on manual entries within Personal Tax.

If you produce a Tax calculation for the current tax year, a disclaimer will be added to the end of the Tax calculation to inform the reader that the figures shown are not final. The disclaimer will appear as follows:

‘The above calculations have been made using most of the latest available Income Tax and Class 4 National Insurance rates and allowances for the current tax year. However, as these are subject to change, the calculations may not reflect the final liability for the tax year’.

The text of the disclaimer will appear in the same font as used for the body text of the Tax calculation.