underpaid tax for earlier years

peterj1974

Hi
On my self assessment calculation, where it shows th income tax due, there are a couple of additional lines. One is for "high income child benefit charge" for £1076, and the other is for "underpaid tax for earlier years in your tax code for 2016 to 17" and this is for £1029.

I'm really confused what the £1029 is for and why I need to pay it.
Any suggestions?

Thanks

Pete

[Deleted User]

peterj1974 wrote: »

Hi
On my self assessment calculation, where it shows th income tax due, there are a couple of additional lines. One is for "high income child benefit charge" for £1076, and the other is for "underpaid tax for earlier years in your tax code for 2016 to 17" and this is for £1029.

I'm really confused what the £1029 is for and why I need to pay it.
Any suggestions?

Thanks

Pete

The bad news is that you must have had an underpayment for some reason for an earlier year (probably 2014/15?) and this was collected through PAYE in 2016/17.

The good news is that you have already paid it!

badmemory

I would suggest that you check on the status of your child benefit claim to ensure that you are not receiving it when you shouldn't be (re personal income of £50k +) or you could be stuck with penalties as HMRC consider it is not their responsibility to notify people that there could be downsides to receiving child benefit.

I should amend that last line - they do not consider it is their responsibilty to notify people UNTIL they have incurred penalties.

Dazed_and_confused

The most likely explanation is that you completed a self assessment return for 2014:15, the amount due was £1029 and you didn't pay it direct to HMRC but it was to be collected by including it in the make up of your 2016:17 tax code. Essentially a lower tax code which would mean an extra £1029 was deducted.

So in 2016:17 you pay an extra £1029 in tax.

Let's say you earned £31,000 and paid £5,029 in PAYE tax deducted by your employer. The £4,000 which would normally be due and £1,029 to pay the 2014:15 self assessment debt.

When you fill in your 2016:17 self assessment return you have to put your P60 details on, which show pay £31,000 and tax £5,029.

On there won this would result in tax overpayment of £1,029 as the tax due on £31,000 is only £4,000. You have to enter the £1,029 to reflect the fact that the tax due for (probably) 2014:15 was included in your 2016:17 tax code.

With that entry your tax return is correct, without it you would get £1,029 refund (or credit towards any other tax/NIC/student loan/HiCBC due for 2016:17).

You are not paying it twice.

If you completed a self assessment return for 2014:15 check your self assessment statement of account, that should show what happened to your self assessment bill for that year, highly likely you didn't pay it direct to HMRC but it was accounted for by being included in your 2016:17 tax code.

You can avoid these complications by indicating on your return that you don't want anything due for 2016:17 to be included in your tax code (it would be the 2018:19 tax code). But then you will need to have funds to pay it direct by 31 January 2018.