Payed no income tax - what happens ?

asharon

Hi,

I hope this is the right forum as I couldn't tell.

Ok I was paying tax normally last tax year and then when I started a third job I stopped paying any at all. I didn't notice at first because I don't check my pay slips and when I did I phoned them and they couldn't tell me why. Thye said they needed some code for one of my employeers as they couldn't find them which was odd as I was previously paying tax there any way.

So I found it out and phoned them and waited a month and nothing. Then again so I phoned them again and they said the person previously had not updated the system. They do record all calls apparently so I can proove I phoned them up and gave the details but hey ho it odes happen.

My problem is that it was not until December I sarted paying tax again and so next april I will owe some tax. Will I get a large bill, or can it be spread out over months, does anyone know how this would work.

Thanks.

ctm_2

The most likely thing that will happen is that at some point after the end of the tax year (April 5 2006) you will receive a calculation saying how much you owe for this year. That will then be collected through your tax code in the tax year after that (the one starting 6 April 2007) and will be collected over the whole 12 month period.

asharon

That would be better than a big bill, but would be nice to knwo why it hapened.

Debt_Free_Chick

If you're on PAYE, you should end up paying all the tax you owe for this year from now on. The PAYE tables are "cumulative" so that your employer looks up your pay to date and it gives the tax to date (for your code).

If, for some strange reason, this doesn't happen then any underpayment this year should be collected via your tax code for next year. You'll probably get a notice showing next year's code soon ... this should specifically state the adjustment that will be made to next year's code in order to collect any underpayment of this year's tax.

HTH

inkie

I just got a letter yesterday from the TO saying that I had an underpayment for the last tax year and I have to pay £1600 by the end of the month! The letter said they have yet to decide whether they will allow it to recouped through 'extra' PAYE thorughout this year or as a lump sum. Then I opened another letter in the same post with a payment reminder - they want the cash by the end of th month after all! oh heck!

Savvy_Sue

Phone them and ask if at least some of it can be recouped through PAYE. If you don't ask, you don't get.

sarahlouise210

inkie wrote:

I just got a letter yesterday from the TO saying that I had an underpayment for the last tax year and I have to pay £1600 by the end of the month! The letter said they have yet to decide whether they will allow it to recouped through 'extra' PAYE thorughout this year or as a lump sum. Then I opened another letter in the same post with a payment reminder - they want the cash by the end of th month after all! oh heck!

The only reason that you would have been asked to make payment by the end of the month is if you have completed a tax return. There are deadlines for collecting the tax through your code number and it may be too late to transfer the payment from your Self Assssment account to PAYE. If this is the case you can still ask for time to pay - ring the helpline to discuss your options. Remember - if you can have it coded that will be better than a time to pay arrangement as there is no interest when the underpayment is collected through PAYE.

sarahlouise210

asharon wrote:

That would be better than a big bill, but would be nice to knwo why it hapened.

What (probably) happened is that you started the third job but did not hand in a P45 - the third job did not therefore know how much you had earned previously in the tax year and instead of taxing you on an emergency basis while they found out - they gave you all you tax free allowances from scratch when they had probably already been used up by your other 2 jobs.

asharon

Luckily it only started at the beginning of the tax year so the worst case scenario is about £800 and I will take the advice and phone on Monday to see if I can up my payments before the end of the year. That or put 20% of my pay aside each month.