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HMRC begins issuing revised SA302s for 2016/17 Tax Year

J

By Jenny Strudwick

Author
J

By Jenny Strudwick

Senior Product Manager

Jenny is Senior Product Manager for Tax at IRIS. She has been with IRIS for over 18 years working across many different departments including Support, Engineering and now Product Management. During this time she has been instrumental in major tax changes from FBI to iXBRL and now MTD. Jenny works closely with HMRC on major changes in taxation especially now as they develop their MTD strategy. Prior to joining IRIS, Jenny spent a number of years in practice and has now accumulated over 21 years’ experience in UK taxation and tax software.

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Updated 7th July 2022 | 7 min read Published 15th November 2018

HMRC recently announced that they will be contacting some taxpayers directly where their 2017 tax calculation was incorrect and will be issuing revised SA302s. However, HMRC will not be communicating with agents even if the agent made the submission on their clients’ behalf.

If you cast your mind back to last year when you were completing 2017 tax returns, you will no doubt remember that HMRC had some issues with their tax calculation. 
The errors in their calculation resulted in 22 different exclusions, details of these are included below. That’s 22 different reasons why a client’s tax return could not be submitted online because the HMRC system had the wrong tax calculation that would cause the Return to be rejected, or worse still it was accepted but with the wrong tax liability calculated.  
Our team at IRIS worked really hard with HMRC to help them resolve a lot of these mistakes. We made every effort to update our tax products as soon as possible to rectify their errors and place blockers in the products to prevent returns containing errors from being filed online. However, you may find that some of your clients were still affected, either because the return was completed and filed before the correction was made, or due to a complicated and rare scenario that was not uncovered until extremely late in the process. Therefore, we want to make you aware of HMRC’s plan, so that you are prepared in case you do have any clients that receive a revised SA302 from them. 
HMRC have identified the taxpayers affected and they will be issuing new SA302s to those taxpayers directly. They plan to begin this work on 19 November 2019 and all new SA302s should be issued by the end of the month. If the new SA302 results in more tax to pay and the taxpayer makes the payment within 28 days of the date on the new SA302 then they will not be charged interest or penalties. 
 
Details of each of the HMRC exclusions and the changes made by HMRC are detailed below for your convenience:
Exclusions affected
Non-UK resident – Exclusions 57, 67 and 73 
57 – We have corrected the tax calculation to include the 7.5% notional tax paid on your UK Dividend income..
67 – We have corrected the tax calculation to include the tax due on trust income.
73 – We have corrected the tax calculation to include the loss relief claimed. 
Beneficial Ordering – Exclusions 68, 69, 70, 72, 76, 78, 79, 82, 83 and 85
We have reviewed the customer’s record, reviewing the income and how the personal allowance and/or reliefs are allocated to ensure the allocation is most beneficial to the customer
Dividend Tax Credit, Trust and Lloyds – Exclusions 62 and 75
Where a customer has an accounting period covering two tax years, i.e. before 6 April 2016, any dividend income received will be due tax relief on the portion of income received up to 5 April 2016. We have correct the tax calculation to give the relief due on the apportioned income.
Marriage Allowance Transfer (MAT) – Exclusions 66 and 66A
If the customer is due to pay any income above the basic rate the Marriage Allowance transfer is invalid. 
We have reviewed the customer’s record, reviewing the income and how the personal allowance and/or reliefs are allocated to ensure the allocation is most beneficial to the customer. Where they are due to pay any tax at the higher rate, we have removed the Marriage Allowance transfer.
Capital Gains not Calculating – Exclusions 64 and 77 
We have corrected your tax calculation to include the tax due on your Capital Gains in the year.
Chargeable Event Gains – Exclusions 74 and 81
We have reviewed your income and re-calculated the Top slicing relief that is due.
Pension Lump Sum – Exclusion 87
We have reviewed your income and re-calculated the tax due on your state pension lump sum. The whole of the State pension lump sum is taxable at the highest rate of tax at which the customer is liable. The amount of the lump sum will not alter the rate the customer pays. We do not take into account the lump sum payment when calculating the net adjusted income.
We hope you find this information helpful.

If you cast your mind back to last year when you were completing 2017 tax returns, you will no doubt remember that HMRC had some issues with their tax calculation. 

The errors in their calculation resulted in 22 different exclusions, details of these are included below. That’s 22 different reasons why a client’s tax return could not be submitted online because the HMRC system had the wrong tax calculation that would cause the Return to be rejected, or worse still it was accepted but with the wrong tax liability calculated.  

Our team at IRIS worked really hard with HMRC to help them resolve a lot of these mistakes. We made every effort to update our tax products as soon as possible to rectify their errors and place blockers in the products to prevent returns containing errors from being filed online. However, you may find that some of your clients were still affected, either because the return was completed and filed before the correction was made, or due to a complicated and rare scenario that was not uncovered until extremely late in the process. Therefore, we want to make you aware of HMRC’s plan, so that you are prepared in case you do have any clients that receive a revised SA302 from them. 

HMRC have identified the taxpayers affected and they will be issuing new SA302s to those taxpayers directly. They plan to begin this work on 19 November 2018 and all new SA302s should be issued by the end of the month. If the new SA302 results in more tax to pay and the taxpayer makes the payment within 28 days of the date on the new SA302 then they will not be charged interest or penalties. 

Details of each of the HMRC exclusions and the changes made by HMRC are detailed below for your convenience:

Exclusions affected

Non-UK resident – Exclusions 57, 67 and 73 

57 – We have corrected the tax calculation to include the 7.5% notional tax paid on your UK Dividend income..

67 – We have corrected the tax calculation to include the tax due on trust income.

73 – We have corrected the tax calculation to include the loss relief claimed. 

Beneficial Ordering – Exclusions 68, 69, 70, 72, 76, 78, 79, 82, 83 and 85

We have reviewed the customer’s record, reviewing the income and how the personal allowance and/or reliefs are allocated to ensure the allocation is most beneficial to the customer

Dividend Tax Credit, Trust and Lloyds – Exclusions 62 and 75

Where a customer has an accounting period covering two tax years, i.e. before 6 April 2016, any dividend income received will be due tax relief on the portion of income received up to 5 April 2016. We have correct the tax calculation to give the relief due on the apportioned income.

Marriage Allowance Transfer (MAT) – Exclusions 66 and 66A

If the customer is due to pay any income above the basic rate the Marriage Allowance transfer is invalid. 

We have reviewed the customer’s record, reviewing the income and how the personal allowance and/or reliefs are allocated to ensure the allocation is most beneficial to the customer. Where they are due to pay any tax at the higher rate, we have removed the Marriage Allowance transfer.

Capital Gains not Calculating – Exclusions 64 and 77 

We have corrected your tax calculation to include the tax due on your Capital Gains in the year.

Chargeable Event Gains – Exclusions 74 and 81

We have reviewed your income and re-calculated the Top slicing relief that is due.

Pension Lump Sum – Exclusion 87

We have reviewed your income and re-calculated the tax due on your state pension lump sum. The whole of the State pension lump sum is taxable at the highest rate of tax at which the customer is liable. The amount of the lump sum will not alter the rate the customer pays. We do not take into account the lump sum payment when calculating the net adjusted income.

We hope you find this information helpful.

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