Found Out I owe Tax

milpip

:mad:

Received a letter from the inland revenue last week saying I owed them just under £400.

This is because, obviously, I have not paid enough tax.

I checked their calculations, my payslips and my P60.

I found that because I get an 'employee benefit' of about £1800 for a rail ticket, this should be added to my annual take home pay. This extra amount is not shown on my P60 but is shown on the calculation done by the IR.

Is this an error by my employers? I am thinking it is as they have not shown on my P60.

If it is my employer mistake can I get them to pay my extra tax payment???

chrismac1

This would normally be on a form P11d which is separate to the P60. The P60 deals with cash payments, the P11d with "benefits in kind" with the "in kind" meaning non-cash items.

milpip

Chris,

Should I have received a P11d?

It still doesn't explain why I was not charged the correwct tax!

pjclar02

Hello there

In answer to your question "is this a mistake by my employer" - it depends. If your employer pays for the rail tickets directly to the travel company, then the cost of the ticket would be included on your P11d as quoted above. This is something that is not included on your P60 as noted by Chrismac1. You can, though, get your PAYE code adjusted to take account of this benefit such that the tax is collected monthly through PAYE and you do not get hit with large tax bills after the end of the year.

However, if you pay for the tickets personally, and the company reimburses you for the cost of these - the position is different. This should then be taxed monthly through your payroll, as well as having class 1 National Insurance deducted. If this scenario applies, then your employer could be at fault for not deducting PAYE on the reimbursements.

Hope this helps.

withabix

milpip wrote: »

If it is my employer mistake can I get them to pay my extra tax payment???

HMRC have charged you the extra BECAUSE of the information provided by your employer to them on a P11D.

Employers only have to provide this information once per year - in June, for the previous year's employment.

It is up to you, the employee, to advise HMRC of 'benefits in kind' if you want them to take them into account in the first tax year of an employment.

Typical (and very common) examples of this type of 'benefit in kind' are your situation, company cars, private health care etc.

Nobody is at fault here, other than you.

milpip

Well it would have been nice to have been told that I had to tell the HMRC.

Considering the 'Benefit in Kind' is on every payslip I had assumed I was being taxed on it at source!!!

pjclar02

You would have been paying class 1 National Insurance on the benefit at source.

Whether tax should be deducted at source depends upon the distinction referred to in my earlier post.

Mikeyorks

In that respect the letter (P800?) from HMRC is advisory. And they will code it out this next year.

Most benefits in kind operate in arrears. You only had to tell HMRC if you wanted the deductions concurrent with the benefit ...... few do so advise.

chrismac1

I have some sympathy with the OP. Like many posters on this site, the root cause is the ridiculous complexity of our tax system, combined with the total lack of proper financial education given in our country, too busy teaching Media studies and health and safety.

CLAPTON

how do you receive the bnefit

is it cash through the payroll or do they pay directly for the ticket?

how is it shown on your payslip

jimmo

milpip are you really saying that your employer paid £1,800 in a year for you to travel from home to work (normal commuting) and you didn't pay them a penny back?
In my experience that would be unusual, but not impossible.
How come the benefit in kind appears on every payslip? What do the payslips actually say?
My guess would be that your employer gives you a season ticket loan and you repay that in monthly instalments and your benefit in kind is way below what HMRC have charged you.
Can you explain exactly what you get from your employer?