Income tax - confused! Help needed please!

moneypenny21

I received a letter from HMRC saying I owed them £151 for last year. but fine.

I got my new tax code through. Personal allowance is £11000. Also fine.

Then there is a note to say "less underpayment restriction £759" We previously told you that you owe £151 from an earlier tax year. To collec this we divide this amount by the rate of tax you pay to calculate an adjustment to your tax free allowance.



Tax code is therefore 1024L.

Can anyone explain where the £759 has come from please? I just don't understand!

Thanks in advance

CLAPTON

moneypenny21 wrote: »

I received a letter from HMRC saying I owed them £151 for last year. but fine.

I got my new tax code through. Personal allowance is £11000. Also fine.

Then there is a note to say "less underpayment restriction £759" We previously told you that you owe £151 from an earlier tax year. To collec this we divide this amount by the rate of tax you pay to calculate an adjustment to your tax free allowance.



Tax code is therefore 1024L.

Can anyone explain where the £759 has come from please? I just don't understand!

Thanks in advance

if you have a reduction in tax code of 759 then you pay
759x20% = 151 more tax

[Deleted User]

Hi,

as CLAPTON says above.

Your personal allowance is £11000, but your tax code will be 1100L.

The adjusted code of 1024L is to collect the £151 through your wages.

moneypenny21

Doh! Thanks both, for some reason I just thought they would take the £151 in one go. I'd rather have paid it up front but never mind!

Makes much more sense now. Thank you

CLAPTON

moneypenny21 wrote: »

Doh! Thanks both, for some reason I just thought they would take the £151 in one go. I'd rather have paid it up front but never mind!

Makes much more sense now. Thank you

HMRC have no way of taking a lump sum : they would have to ask you to send a cheque