Tax codes - I owe them money??

pinkshoes

I used to have private health insurance, so around £400 was deducted from my tax free allowance. In May 08 I changed job, so no longer had this benefit, but when I got my new tax code for 2009 to 2010, I noticed it seemed to think I was getting private health insurance from my new employer, which was incorrect.

I phoned them up to notify them of the mistake (i.e. I'd only had private health insurance for 1 of the 12 months of the 2008/2009 tax year), and they said I'd receive a tax rebate, or at least that's how I understood it.

I've just received a letter saying I owe them £80, and they've changed my tax code so I pay an extra 20% on £400!!!

I'm really confused. Can anyone shed any light on this?

Mikeyorks

A £400 reduction in your code ..... if you pay 20%, is £80.

But I can't explain why you are £80 underpaid ... the letter / calculation should do that?

sarflee

Is the underpayment for an earlier year? What may have happened is they have made an adjustment to the 2009/2010 tax code to collect an earlier years underpayment. However, you may still be entitled to a rebate for the incorrect tax collected during 2008/2009.

pinkshoes

I'm not aware that I've made an underpayment for any year!

I've always had the private health insurance deducted from each tax year... so now I don't have it any more, then I should have had an extra £400 tax free last year, not taxed at 20%, so I was under the impression that they owe me money!! That's at least how they seemed to explain it on the phone before they confused me and said that I owe them!

And if I owe them from a previous tax year, then surely at the very least it would be break even near enough?

Looks like I'll have to phone them again, and sit in a 15 minute call waiting queue!