Owing tax and working overtime

chrisd8780

I apparently owe £800 to the taxman:mad:. I have appealed this on the grounds of my ex employer has made a mistake and not deducted enough tax (in hope more than expectation). The £800 is being taken via tax code 545 L instead of 900 odd L.

My question is, if I now work overtime what happens, is it a - The £800 pound is paid back in 12 monthly installments, and my monthly wage plus ot is then tax deducted at usual rate.

b Tax is paid at 545L rate never to be seen again.

c Tax is paid at 545L rate but you get it back if you claim it

d Tax is paid at 545L rate to clear the £800 owed to tax man quicker then your tax code reverts to correct code.

jem16

chrisd8780 wrote: »

a - The £800 pound is paid back in 12 monthly installments, and my monthly wage plus ot is then tax deducted at usual rate.

It's basically this way.

Your personal allowance has been lowered by 9440-5450 = £3990. This means that you will pay 20% tax on £3990 which you wouldn't have done before.

20% of £3990 is £798.