Underpayment through Tax Code - less than calculation

Billy-no-Money

Hi, I hope someone can help me. My wife's been trying to speak to HMRC but constantly gets thwarted by their phone system....

In late March 2008 my wife took a redundancy payment which added to her income that year brought her into 40% tax. She decided to put a lump sum on deposit into a personal pension and claimed the higher rate tax back - a calculation was correctly issued by HMRC in December 2008, showing a total of just over £2500 underpaid tax. This was done by letter, NOT through Self Assessment.

She has not been earning in 2008/09, and has not been claiming benefit.

She wanted to pay the £2500 as a lump sum but despite asking for a payslip she hasn't received one, and has now got a coding notice recovering the underpayment (and hence a negative or 'K' code).

The background isn't that important; what's got us confused is that the underpayment is over £2500, but all that's being recovered through the code is £2000 (the maximum).

Does this mean they will ask for the remaining £500 as a lump sum, or have they somehow 'written off' the difference for the convenience of recovery through the tax code?

We don't want to make a one-off payment of £2500 if all they're actually after is £2000!!

Does HMRC do this sort of thing? It doesn't make sense, but then very little that I read on their website makes sense to me.....

Thank you

butler_helen

just a heads up- when you ring, use the abroad number, I got through instantly instead of being told to ring back later.

sorry I cant help with the rest.

Billy-no-Money

I like that one - that's exactly what happened to her today!

Thanks for the tip :beer:

kitty1801

The additional £500 underpayment should be collected in the following tax year - this would not have been written off (sorry!). The letter your wife received explaining how the underpayment was worked out should have stated how this would be collected. Unfortunately, sometimes the explanation is not always clear.