HMRC collecting too much tax... advice please

tuux1598g

Hi,

So HMRC contacted me earlier in the year to state that this year (2007/2008) I will owe them £68.00 in tax that I underpaid in the previous tax year (i.e. 2005/2006) which is fair enough. But the way in which they have calculated this (by my calculations) actually results in me paying them the £68, plus an extra £50.50 that I do not owe them!... my calculations follow:

Annual Income: £7200
Original Allowance: £5225

reduction to collect unpaid tax: £680

- Their reasoning, which is correct, is that I will pay 10% tax on this £680 over the year = £68.00


So they now give me the £5225 - £680 allowance = £4545

So over the year, I pay back £68 in 10% tax on the additional £680.. but...

Under my original tax code, all my earnings were covered in 10% tax bracket (up to £7375) - however with the new code 10% only covers £6695, so I'm taxed at 22% on some of my earnings (£505 to be precise).

Now this equates to an extra £60.60 in tax over the year more than I would be paying under my initial tax code in addition to the £68.00 that they are claiming (the whole reason they have reduced my tax allowance!)


How do I go about getting this changed... I'll pay the amount in a lump sum if possible £60.60 interest on loaning £68 from HMRC over the year is not good moneysaving is it



Cheers, and thanks for any advice.

Shaun

Hoddie_2

Call HMRC and give them as accurate an estimate of your 07/08 income and they'll adjust the restriction. Just say you think it might be a little high and can they check it for you, then give them your income estimate.