Tax underpayment

lakersgirl

Hi, I was wondering if someone could help. I have received a PAYE coding notice letter this morning in the post. The letter states that my tax code for 2011/12 is 307L and then a note of how it is worked out, which states:
Personal Allowance: £7475
Underpayment Restriction: £4397
Tax free amount of: £3078 = (code 307L)

There is a note at the bottom which then states that I owe £879 from a previous year, which I may remember them telling me about..

I was out of work for 6 months in 2008, so I sent a letter to HMRC in March 2009 asking for a refund of my tax as I was under the threshhold for the year given that I only worked for 6 months.
I received a letter back in April 09 which stated I wasn't entitled to a refund as they had looked into my tax affairs for the previous years and discovered that I underpaid in 06/07 and 07/08 (i had 2 jobs in each of these tax years but filled out the correct forms when starting the 2nd job stating that it was my 2nd income). The tax rebate I was applying for was applied to reduce the overall amount I underpaid and I was told that the outstanding amount of £879 would be collected through my tax code for year ending 5th April 2011.

I therefore had presumed that they had adjusted my tax code accordingly and it would be repaid this tax year. I have a mortgage to pay and really cannot afford for my income to go down, I was wondering if there was anything I could do about this?

I have been looking for information and came accross the ESC A19 but don't know if it would apply in my case? I also came accross information that stated there were rules preventing HMRC from chasing money which should have been paid more than 4 years ago.. (would this cancel out 06/07?)

Any help would be greatly appreciated

HowieTheRookie

me too, got one yesterday

HowieTheRookie

I received a PAYE coding notice yesterday which states an 'Underpayment Restriction' -£6,131

This is calculated on Note 4 on the reverse as £2452.68 which they expect me to pay at 40% = £6,131

- Why do they expect this to be 40% when I'm no where near the 40% income tax bracket.

- How on earth did I underpay so much tax when my salary never changes each month and has actually decreased by 10% since Sept 2010.

John_Pierpoint

You both need to post your actual income figures if you want your notice of coding to be checked for you here.
Don't forget that come April, the starting point for higher rate (40%) tax has been lowered.

........ down from £37,400 to £35,000 - equivalent to an extra £480 per year in tax. The upper earnings limit for class 1 and class 4 national insurance payments has reduced from £844 a week to £817 a week.
National Insurance rates have increased from 11% for lower earnings to 12%, and from 1% for upper earnings to 2%.
Better news for basic rate taxpayers however as the opposite has occurred as their allowances increase from £6,475 to £7,475 per year. The National Insurance primary threshold is now £139 - up from £110 last year.


With thanks to
http://www.taxpenny.co.uk/news/2010/12

dancingfairy

Lakersgirl - it sounds like your problems go back to 06/07 which means you will need to dig out all your paperwork from then and work forward from there. You need to add up your income from both jobs and work out how much tax was due - don't forget the tax allowances would have been different back then.
You need to do the same for 07/08 as well and see how much tax if any was owed from this year.
This would give you a starting point and should be reasonably easy to calculate.
- you then need to check how much was due in 08/09 etc.
I really would go back to 06/07 and check as they could well have made a mistake at any point. Like John Pierpoint said though you need to post the numbers for anyone to check it.
df