Tax Code Query

Essex_Jim

Sorry to start a new tread. My question is different from others.

I complete Self Assessment each year as I use a Lease Car for travelling for work purposes. Each year distance travelled tends to get slightly less by about 3 - 400 miles.

In 10/11, I had an under payment of £700. A bit of a shock, paid and assume the discrepancies would be corrected in a revised tax code which arrived soon after. Just completed 11/12 and under payment of nearly £1800!

Looked at my tax codes for 12-13 and 13-14 it budgets for over £7000. Yet in the last two years I have claimed £2853 (10-11) and £3150 (11-12)

I phoned the tax office and they confirmed the figures should be based on what I have claimed previously (Box 17 in Self Assesement - Figures above) yet they are a long way out.

They said they would change my code. I said I would like to understand how the code was so far out and is there someone I can raise this with as this bills are painful and I guess I face another big bill next year. Basically got the cold shoulder.

Is there anyone I can raise this with or is it down to me for not checking my Tax Code correctly?

xylophone

What are the precise figures for 10-11 and 11-12 and what is shown on your P2 for 12-13 and 13-14?

jimmo

The basic principle of allowing travelling expenses via your coding is that HMRC will use your last established claim as an estimate of your expenses for the year to which the coding will apply.

In practice however there will always be timing issues, for example:

As you already have your coding for 2013/14 it was presumably issued before you submitted your 2011/12 Self Assessment Return so, at the time your 2013/14 coding was determined the latest information available to HMRC was your 2010/11 Return.

On that basis your 2013/14 coding should have included travelling expenses of £2853.

How on earth HMRC allowed a figure in excess of £7000 cannot be explained from the information you have given and, whilst it is no excuse if HMRC have messed this up, the fact is that you have ample opportunity to ask HMRC to adjust to a more realistic figure before 6 April. So, certainly from an HMRC point of view, its down to you for not checking your coding notices.

Hopefully, following your phone call HMRC will put your coding on a more realistic basis but, as they now have your 2011/12 Return they should now give a coding allowance of £3150.

Similarly for your 2012/13 coding it is likely that, at the time the original was issued, HMRC only had your 2009/10 Return to use as a basis. Now, because of the way that codes are applied through the year, asking them to lower your code now is not entirely practical. You will already have underpaid tax for 10 months of 2012/13 and they can only correct, at best, you remaining 2 paydays using a Month 1 basis coding.

Either way, you will almost certainly face another underpayment for 2012/13.

Looking more specifically at your 2011/12 underpayment of £1800 you haven’t given all the figures for that year but if you had a coding allowance of £7000 and a claim of £3150 then a basic rate taxpayer would face an underpayment of (3850 @ 20%) £770. For a higher rate (40%) taxpayer it would be £1540.

That, I am afraid begs the question did you complete your Return correctly or is there another issue that you have not thought of?