Self assessment: underpaid tax from PAYE employment
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tigerminxy
Posts: 113 Forumite
in Cutting tax
Hi
I've just done a self-assessment online and the calculation shows that I underpaid my tax by a huge amount. All my income came from PAYE employment and the underpayment is because not enough tax was collected during the year by my employer, who I've now left. They basically only paid 50% of the tax due. It's a big reputable employer with a proper payroll department, if that makes any difference.
What recourse do I have for this? This puts me in a really difficult position having to pay it all by end of Jan 2018.
TIA
I've just done a self-assessment online and the calculation shows that I underpaid my tax by a huge amount. All my income came from PAYE employment and the underpayment is because not enough tax was collected during the year by my employer, who I've now left. They basically only paid 50% of the tax due. It's a big reputable employer with a proper payroll department, if that makes any difference.
What recourse do I have for this? This puts me in a really difficult position having to pay it all by end of Jan 2018.
TIA
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Comments
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It depends whats happened.
If your employer has acted on the request of HMRC your employer has done nothing wrong.
If your employer has failed to act on request from HMRC then there might be recourse.
Could you tell us your earnings for the period and the tax code used?0 -
I'd rather not share precise figures but looking at the info, the employer's used a tax code of BR when my earnings mean I'm well into the additional rate. The tax deducted last year on similar earnings was broadly correct so don't understand why I've been put on BR tax code.0
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tigerminxy wrote: »This puts me in a really difficult position having to pay it all by end of Jan 2018.
TIA
It shouldn't really put you in a difficult position, because you have had the benefit of the unpaid tax for at least the last 8 months, and as correct taxation is primarily your responsibility you could have put that money aside ready to hand it over when required. If your tax code was incorrect, which seems the most likely reason, then you would have received a coding notice to explain why it was not the standard code, and you could have queried anything you didn't agree with or understand.
The other question to ask you is are you sure that you've filled in the SA correctly? If you've made an error then it might be that you don't owe any tax at all.
Cross posted with your latest post, you need to find out why you were on BR, but if your earnings were more than £11000 then you will indeed have tax to pay. You surely noticed that your net pay was higher in April 2016 than it had been a month earlier?0 -
tigerminxy wrote: »I'd rather not share precise figures but looking at the info, the employer's used a tax code of BR when my earnings mean I'm well into the additional rate. The tax deducted last year on similar earnings was broadly correct so don't understand why I've been put on BR tax code.
Your employer can only and will only change your tax code at the request of HMRC.
You need to find out why HMRC thought you should be on a BR tax code.
Your tax code is your responsibility. If you think its incorrect you need to tell HMRC otherwise you can end up in situations like this where theyre chasing underpaid tax. Theyre usually pretty good at working out who should be paying what tax and they have a habit of always finding it out. Why didnt you question why you where on a BR tax code earlier?0 -
It shouldn't really put you in a difficult position, because you have had the benefit of the unpaid tax for at least the last 8 months, and as correct taxation is primarily your responsibility you could have put that money aside ready to hand it over when required. If your tax code was incorrect, which seems the most likely reason, then you would have received a coding notice to explain why it was not the standard code, and you could have queried anything you didn't agree with or understand.
The other question to ask you is are you sure that you've filled in the SA correctly? If you've made an error then it might be that you don't owe any tax at all.
Cross posted with your latest post, you need to find out why you were on BR, but if your earnings were more than £11000 then you will indeed have tax to pay. You surely noticed that your net pay was higher in April 2016 than it had been a month earlier?
I work in sales so my income varies from month to month. And given that in previous years with this same employer I've always ended up getting a refund after filling in my SA, it never really occurred to me to have to check my payslip from month to month and set aside money.
To be clear, I'm not disputing the tax should have been paid. It's just the situation I'm in having discovered at this stage that my employer's made such a huge error.0 -
tigerminxy wrote: »I work in sales so my income varies from month to month. And given that in previous years with this same employer I've always ended up getting a refund after filling in my SA, it never really occurred to me to have to check my payslip from month to month and set aside money.
To be clear, I'm not disputing the tax should have been paid. It's just the situation I'm in having discovered at this stage that my employer's made such a huge error.
You do not know that you employer has made an error. In all likelihood i doubt they have.
Again, you need to speak to HMRC and find out why you are on a BR tax code. You need to provide them with up to date information so your put on the appropriate code as soon as possible (if you havent already)
Without further information its difficult to help. Reasons as to why youre filling in a self assessment, earnings and tax paid are pretty vital to help you.
Otherwise phone the only people who can clarify things for you 0300 200 3300.
Do not speak to your employer until you have spoken to HMRC and definitely dont accuse them of making a huge error when you dont know they have.0 -
Done some digging around. It's not the employer's fault - HMRC gave them the wrong tax code. The correct tax code was, for some reason, given to an employer I left years ago. I've started a new thread on this because the question's slightly different.
http://forums.moneysavingexpert.com/showthread.php?t=57598390
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