Computation
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A pension contribution made in the following tax year is brought back to the current tax year but no deduction appears in the computation. Why?
Under the SA system pension contributions brought back from the following year are not given as direct deduction to the tax computation.
The amount of relief is given by a kind of tax credit. For example, a gross premium of £1,000 carried back is worth £400 to a higher rate taxpayer. This amount (£400) should be entered as an amount of 'tax you are reclaiming now' in box 15 on TCS2 (2007 : 18.8).
This will act like a credit on the client's account. The amount must be computed manually. Treat the amount as if the client has paid an amount towards his or her next balancing payment or payment on account.
Payments made after 6/4/2001 or any employee contributions prior to that date are paid net of basic rate tax. Therefore additional relief applies only to higher rate taxpayers.
For example a higher rate taxpayer making a contribution of £780 net (in 2001-2002) will be entitled to another £180 tax relief.
To enter the tax you are reclaiming now select Tax code & Underpaid/Overpaid/Repaid from the miscellaneous data entry menu.
The amount entered will not affect the computation of the tax due for the year in box 18.4 or the payments on account, if applicable, in box 10 on TCS1 (2007 : 18.7).
From 6/4/2006 it is no longer possible to carry back pension contributions made in the following year into the current tax year.
Why are the trading losses not appearing as deductions on the computation?
s380 claim must be made. The losses will not automatically be deducted from income, they will be carried forward (s385) for use against future profits from the same business if no action is taken.
To make a s380 claim, enter the 'loss offset against other income' (as a positive number) on the adjustments to profit and loss for tax screen (sole trades) or the share of trading income screen (partnerships).
Where does such and such an amount come from?
Click here for Tax Computation information.
The trade has ceased but the trade computation does not reflect this. Why?
The trade computation should show the words "closing year computation", if it does not the cessation date has not been entered.
For sole traders: ensure that the trading ceased date has been entered.
For partners: ensure the involvement end date has been entered.
Note that involvement dates are not used for sole traders.
Select Sole Trade or Partnership under Trade, Profession or Vocation on the tree-view menu.
Click Edit on the top list-view.
Enter the trading cease date on the Basic tab for sole traders or Involvement details for the involvement end date (partners).
The profits are far lower than expected because of an overlong basis period. Why is it so long?
IRIS must be given the starting date for each account period that forms part of the basis period.
Either enter the trading start date (if the account period is the first one) or enter the preceding account period end date (note that it is not necessary to enter any figures for the earlier period).
Select Sole Trade or Partnership from the Trade, Profession or Vocation option on the tree-view menu.
Click Edit beneath the top list-view or double-click on the business.
Enter the trading start date on the Basic tab. Click Periods to add the preceding account period.
