tax Q re underpayment

meemo38

Thanks for all the help, i did originally just think it was because he used to work 20 hours, but has been doing 25 hence going over his tax bracket, and we assumed his employers would just take out any extra tax he needed to pay.......but obviously not so now we have to pay them back, we had a letter today stating we can't pay it back with next years code for some reason, and has to be a lump sum, but if we find that difficult to ring and sort a monthly payment thing

chrisbur

Do you have P60s for these years if so do the earnings on them agree with the P800 figures and also what tax code is on the P60s. If no P60s do the same for last week's payslip for each year. In 12/13 the employer appears to have used a tax code of 1000L.

jem16

meemo38 wrote: »

I hope you can understand all that :rotfl:

The figures are understandable but they don't make much sense without the relevant tax codes for each year. In each case tax taken would not match the normal tax code for each year.

As has already been said we need P60 figures and tax codes for each year.

meemo38

Hi, thanks once again for all the help, found the P60s
Tax year april 2012 Final tax code NT W1 pay £7788.99tax deducted 0.00
Tax year april 2013 Final tax code 810L W1 pay £11034.62 tax deducted £208.60

chrisbur

meemo38 wrote: »

Hi, thanks once again for all the help, found the P60s
Tax year april 2012 Final tax code NT W1 pay £7788.99tax deducted 0.00
Tax year april 2013 Final tax code 810L W1 pay £11034.62 tax deducted £208.60

From the tax figure for April 2013 I would assume that 810L week 1 was not used for the full year but that it started with NT you can perhaps confirm this from some payslips for the earlier part of the year.
This then leaves the main question why was NT tax code used. This is the cause of the tax underpayment. Have you got anything from the tax office advising of this code, was it ever queried with the employer as to why it was being used?


I have a theory that it may have been used wrongly by the employer. They perhaps saw this as a case where they had an employee who due to low earnings they did not have to advise the tax office about. They used tax code NT (no tax) wrongly and forgot to check if earnings went above the point when they needed to advise the tax office until into 12/13 when they realised it had gone wrong and started using the emergency tax code. As I say a theory only the employer could confirm if this is true, but unless you know of a reason for the NT code it is all I can think of.

jem16

meemo38 wrote: »

Hi, thanks once again for all the help, found the P60s
Tax year april 2012 Final tax code NT W1 pay £7788.99tax deducted 0.00
Tax year april 2013 Final tax code 810L W1 pay £11034.62 tax deducted £208.60

As chrisbur says, the problem has arisen because of the NT tax code.

Here are the reasons that an NT tax code can be correctly used. Do any of them apply?

http://www.hmrc.gov.uk/manuals/pommanual/PAYE11010.htm

twig1_2

If the NT was wrongly used in 2012/2013 for the earlier part of the year resulting in the wrong amount of tax being deducted over all would this constitute a good reason why the inland revenue could go after the tax from the employer or failing that a valid reason for paying the extra tax in the tax coding?

insurgente

apologies for hijacking this thread, but I feel my question is better here than starting a new thread

I just got the dreaded HMRC letter today to say that I "underpaid tax for the year 2012-2013"

Certainly not what you want to see just before Christmas. As I was out of the country between August 2012 and February 2013 and not working, I'd assumed I'd be due a refund as my personal tax-free allowance wouldn't have been used correctly.

'luckily' for me, the amount I've underpaid is quite 'small' if you stretch it out over 2014.... Is it even worth me chasing this up? I had several employers during that tax year, so it'll take some working out. I don't want HMRC coming back to me and deciding that I owe even moooooore

jem16

insurgente wrote: »

'luckily' for me, the amount I've underpaid is quite 'small' if you stretch it out over 2014.... Is it even worth me chasing this up? I had several employers during that tax year, so it'll take some working out. I don't want HMRC coming back to me and deciding that I owe even moooooore

It's up to you whether you chase it up or not. If the figures are correct, there's not really any point.