Hi, could anyone give some advice on how to calculate the tax that you may owe or are to be refunded on a tax return. Also, are drawings put into a tax return? thanx
To calculate the tax payable/repayable you need to ascertain the total statutory income for the year, which could include trading income, employment income, interest received and dividends. You will also need to calculate any capital gains/losses in the year. There may also be losses brought forward from previous years which could be utilised. The income/gains will then be subject to annual allowances and the excess will be taxed at the relevant tax rates. If there are losses in the year there is potential to carry these back to prior years or offset against taxed paid in employment.
Check out the HMRC website which contains a lot of guidance notes on calculating tax and completing a tax return.
Drawings would not be included in a tax return as the individual is taxed on their share of the net profit the business makes not the amount withdrawn from the business.