Advice please - debt due to wrong tax code

warnski

A friend of mine claims that they've just found out they're in considerable debt to the tax man due to their employer using the wrong tax code.

Even though the fault lies with the employer, they're supposedly having to pay interest on what they owe.

Can this be right? It seems very unfair. Or does my friend have her wires crossed?

p00hsticks

Why didn't she notice that the wrong tax code was being used ? If it's anything other than the default one (810L for this year) then HMRC should have snt her a tax coding notice to tell her what the code to be used was and why. Did she receive one of these ? Did she check that she agreed with the calculation ?

Her employer then should have applied this tax code, and it should be showing on her payslip every week/month. Did she check that the code being used by the employer matched what HMRC told her (or the default code) ?

Has she any other job or source of income that she should have told HMRC about ?

Even if the error was her employers, I think the onus is still on her to check her code and query if she believes it's wrong.

McKneff

Lots more details are needed to allow anyone to help to be honest.

Why not get your friend to sign up on here so she doesnt have to pass personal details to you

Do you know what tax code she was on.

It's amazing how many people don't understand the basic tax rules in this country. If someone was taking hundreds of pounds off my salary every month, I would want to know exactly why it is the amount it is.

No matter who has made the mistake, if she has underpaid tax, she has no choice but to pay it back. This is normally done through a change of code to get it back to normal.

somethingcorporate

Our tax affairs are personal. HMRC would have written to your friend every year telling them what their tax code was, how it was made up and to contact them if there was any issues with it.

Why does the responsibility lie with the employer?

grey_gym_sock

well, the employer could be a fault - we don't know the circumstances. however, employers don't choose the tax code, they use the code they're given by HMRC. so the question is more about how HMRC came to issue an incorrect tax code (if they did).

warnski

somethingcorporate wrote: »

Our tax affairs are personal. HMRC would have written to your friend every year telling them what their tax code was, how it was made up and to contact them if there was any issues with it.

Why does the responsibility lie with the employer?

I've worked in the same place for nearly 10yrs, and the first time it ever occured to me to question my tax code was when I became a regular on this site and read about the MSE tax code calculator.

I always assumed my employer would use the correct tax code on my payslip, and I believe the majority of working class people in this country operate under the same assumption, wrong though it may be.

warnski

somethingcorporate wrote: »

HMRC would have written to your friend every year telling them what their tax code was, how it was made up and to contact them if there was any issues with it.

I dont remember HMRC ever writing to me with such info

warnski

McKneff wrote: »

No matter who has made the mistake, if she has underpaid tax, she has no choice but to pay it back. This is normally done through a change of code to get it back to normal.

I realise that, what I'm questioning is the fact that my friend seems to think she is being made to pay interest, rather than just the amount owed

antrobus

warnski wrote: »

I dont remember HMRC ever writing to me with such info

That's entirely possible. A lot of people will simply have the standard L or whatever suffixed code that gives them the standard personal allowance. Employers automatically update those codes in line with the Budget changes each year, employees are not given individual notification of such changes.

warnski wrote: »

I realise that, what I'm questioning is the fact that my friend seems to think she is being made to pay interest, rather than just the amount owed

Interest is due on the late payment of income tax. But without further detail of how and why you friend built up this tax debt it would be impossible to comment further.