MSE News: Millions more forced to pay £100s in tax underpayments

dori2o

pleasedelete wrote: »

In year they can take tax underpayments with no cap. I had 11k (entire salary) taken in March with no warning.

Company and I both challenged it but they said it was allowed. It was an incorrect tax code which had been in place for entire year (debate whether it was company or hmrc at fault).

Any decent employer worth their salt would have seen this extra large deduction and operated the revised code on a wk1/mth1 (which they can do without seeking permission from HMRC) basis to prevent any 'catch up'. This would then have been reviewed at the year end when the P60 information was received.

This is part of the problem now with automated payroll and payroll clerks nowadays. As long as you can operate Sage, thats all that seems to matter, who cares if you actually know anything about payroll accounting, tax, NI, so long as the system keeps running thats all that matters.

le_loup

pleasedelete wrote: »

It was an incorrect tax code which had been in place for entire year (debate whether it was company or hmrc at fault).

Or your for not looking at your Notice of Coding!

John_Pierpoint

I am getting confused.
I thought a "K" code could only help itself to 50% of a PAYE income.
(but that could be 100% until it catches up from the 6th April ?)
Has something changed?

dori2o

John_Pierpoint wrote: »

I am getting confused.
I thought a "K" code could only help itself to 50% of a PAYE income.
(but that could be 100% until it catches up from the 6th April ?)
Has something changed?

No, the ruling has not changed.

John_Pierpoint

So probably not a good idea to issue a "K" code update in March? Tends to give the punter a nasty shock?

coylei

Like millions of other pensioners, I was shocked to receive a P2 PAYE Tax Coding Notice in March 2011, with a new tax code of K529 claiming that I owed HMR&C £1527 from a previous year: I have just received a new tax code P403, and a personal letter of apology for their admitted error: I intend to post a detailed "step by step" to assist MSE members fight the demand for an underpayment of income tax: Ian, Glasgow

saunders_donna

my mother has worked all her life and only started getting her pension in 2010. She recieved a letter yesterday stating that she owes 3,650 because the tax office failed to keep her tax records up to date which they said in the letter itself. This amount is only for the year 2010/2011 because of her state pension. She only recieves 200 pound a month pension yet if my calculations are correct they would have been taxing her approximately 304 pound a month for a 200 pound a month pension! now that doesnt make sense to me. They have also informed her that they will be taxing her at a rate of 40% from april next year to pay it back. My question is because the tax office has admitted liabilty and the fact that they would be taxing her almost twice as much as the pension she is getting can she appeal against this???

Mikeyorks

You need to post the figures from the P800 and her pay / tax details from the equivalent P60. As - on the face of it - your figures don't add up.

If the underpayment is purely for pension payments then - unless she is in the 40% rate already - the shortfall can only be 20% of the pension paid? It can't possibly exceed it - unless there's also an underpayment for an earlier year(s) also factored in.

John_Pierpoint

saunders_donna wrote: »

my mother has worked all her life and only started getting her pension in 2010. She received a letter yesterday stating that she owes 3,650 because the tax office failed to keep her tax records up to date which they said in the letter itself. This amount is only for the year 2010/2011 because of her state pension. She only receives 200 pound a month pension yet if my calculations are correct they would have been taxing her approximately 304 pound a month for a 200 pound a month pension! now that doesn't make sense to me. They have also informed her that they will be taxing her at a rate of 40% from April next year to pay it back. My question is because the tax office has admitted liability and the fact that they would be taxing her almost twice as much as the pension she is getting can she appeal against this???

How old is your mother?
Are you sure that her arrears don't date back to before her pension, or did she claim the state pension and carry on working?
My late uncle was put on a "K" coding for deductions from his company pension, and subsequently got into a mess, because a "K" code can only take away 50% of the tax payer's PAYE income - his company pension.
It was only a little over £1,000 a year so he was getting progressively deeper in debt.

Before you try to take on HMRC you need to do the sums.