Clearing a debt with tax money

langtod8

Hi all, I wonder if I can seek some advice. 2 questions:

1. I have received a tax refund in this months wages that I know I will owe back to the government. The amount may be sufficient to clear a debt that has been passed to Westcot Debt Management Services and I am tempted to use it that way. Paying the amount over the year back to HMRC will cost a similar amount to my current repayments. Is this a good idea?
2. Do conversations with DM companies always have to be written in a letter or will emails do?

Thanks in advance for any help.
D

Growurown

langtod8 wrote: »

I have received a tax refund in this months wages that I know I will owe back to the government. The amount may be sufficient to clear a debt that has been passed to Westcot Debt Management Services and I am tempted to use it that way. Paying the amount over the year back to HMRC will cost a similar amount to my current repayments. Is this a good idea?

Do conversations with DM companies always have to be written in a letter or will emails do?

I'm not clear as to why you want to do this. Will paying Westcot off save you money in the long run because you are also saying that paying back HMRC will cost a similar amount?

As to letters or emails can't really say. I tend to think of letters as more 'official'

langtod8

I am so sorry for not replying. I do not know how I missed the reply

Yes, the money saved in the long run is down to the Wescot repayment being a reduced settlement payment, saving me nearly £1000. My problem is more to do with using tax money in this way, could HMRC just demand all of the money in one hit?

CLAPTON

langtod8 wrote: »

Hi all, I wonder if I can seek some advice. 2 questions:

1. I have received a tax refund in this months wages that I know I will owe back to the government. The amount may be sufficient to clear a debt that has been passed to Westcot Debt Management Services and I am tempted to use it that way. Paying the amount over the year back to HMRC will cost a similar amount to my current repayments. Is this a good idea?
2. Do conversations with DM companies always have to be written in a letter or will emails do?

Thanks in advance for any help.
D

how much have you recieved as a tax refund?

what do you mean you will pay this back over the year?

triple_choc_chip

If you are salaried on PAYE your tax will be calculated each payday. Without knowing your circumstances this could means several things: e.g.:
If you have had a period of reduced or no pay before this one, the payment is correct and you will not owe anything.
If you are on a basic rate or emergency code and this is changed at some point in the future to cumulative, on the following payday the recalculation will take anything owing in one hit.
If you get to the end of the financial year and still owe HMRC they will alter your tax code and take it back gradually over the next year providing you remain on PAYE.
If you are required to fill out an annual tax return to include several sources of income, you will receive a supplementary tax bill for any monies owing.
That's not a complete list of scenarios, just the ones that I know of...

langtod8

That makes sense. I have remained in permanent employment for several years and have been paid properly through PAYE until January. I reclaimed for washing my work clothes and was successful, they sent me a cheque for the monies owed and gave me a new tax code to reflect the clothes washing. However, I am certain that my company have put this into their system wrongly as between January and April I have had most of my years tax refunded to me through PAYE. I was assured that nothing was wrong, and they could only do what the computer is telling them, but my instinct is that they have put me in the computer as having a full years tax allowance in just the final 3 months of the year if such a thing is possible. Thus I am confident I will have to pay this back, I just dont know when. As the relevent tax year has already ended I guess they will cotton on soon and get in touch one way or another. I am annoyed with my boss for ignoring my concerns and not really looking into the problem, but if I use the money for a reduced settlement and save myself a lot of money then maybe it could just be a blessing in disguise.

CLAPTON

tax is all about detail

if you want to post up the figures then we could help better

how much is you washing allowance
how much was you tax repayment
what was you tax code in april 2011 and how did it change
what is your tax code for 2012-13?

triple_choc_chip

Mmmm, I'm guessing again, but usually you can claim back up to 6 years so the cheque could be for historical tax years - only you know what you have claimed for, but if you didn't put in for past years, you still can!

When your tax code is altered is does apply to the whole of the tax year at that time therefore the January change would have had an impact on the 9 previous months and you would have received 9/12ths of the tax allowance back in that month. Going forward the difference would be 1/12th each month.

You would have received a copy of the new tax code and also your employers; check that the number showing on your payslip is the same as on your copy.

langtod8

Sorry all, thanks for trying. Each time I post I think I am clarifying points but it seems I am making things more complicated lol. To be honest the full story is complex and if the full story is what is required I may have to dig out some old wage slips for the numbers.

The repayment direct from HMRC covers the backdated clothes washing and was for about £110. I am happy that this is correct and will not need repaying.

I started working for this company in October, having worked and paid tax for another company right up until I moved.

In January I got a cheque for £110 for my backdated washing claim and paid £143 tax - which had been the same for Decemeber and November.
I also got a new tax code which because of the time of its arrival was not actioned until February pay.

In February my tax code then changed from 747L X to 757L, but I did not pay any tax and my year to date amount remained £646.

In March I had a wopping £481 refund with my year to date obviously reducing to £165. This amount is reflected on my P60.

By my reckoning this makes me owe £143 for the tax not paid in February, £143 for the tax not paid in March, and £481 for tax refund in March that I am not entitled to - totalling £767.

There are no apparent tax anomalies with the previous company and from memory all amounts were pretty much as expected on my P45 although I do not have this with me to check.

As an aside, my tax code is still the 757L given to me in January so I guess that needs updating too, but my boss says that until they get a new code from HMRC that they can not change it for me.