HMRC deduction through PAYE

In_For_A_Penny_2

I’ve scanned through the forum but can’t see this particular question addressed.

My wife received a letter revising her tax code for what remains of 2017/18. We are both PAYE no additional incomes. Both approx. £80k/yr gross. Jobs haven’t changed for years.

HMRC have stated that my wife’s tax code has been changed to 828LX (previously 1109L - including some professional subscriptions) because of an “underpayment from previous year £4,415”.

We are at a loss to understand why this has happened but my question relates to the actual amount owed.

My understanding is that the reduction in the personal allowance of £4415 above is in order to collect the unpaid tax through PAYE? I assume therefore the amount owed is not quite £4415? Is there a way to calculate how much is actually owed so we can try and figure out where this has come from?

I will phone them to clarify but at this time of year that is a painful process.

Any advice/explanations would be most welcome.

Dazed_and_confused

She could take a look at her personal tax account on gov.uk now rather than waiting to phone.

It may well show up on there but are you sure the letter (tax code notice, used to be called a P2) doesn't specify the amount in a different section?

In_For_A_Penny_2

Dazed_and_confused wrote: »

She could take a look at her personal tax account on gov.uk now rather than waiting to phone.

It may well show up on there but are you sure the letter (tax code notice, used to be called a P2) doesn't specify the amount in a different section?

Thanks, unfortunately neither the letter nor the gov.uk website provides any insight which struck me as rather odd.

Linton

In_For_A_Penny wrote: »

.......
My understanding is that the reduction in the personal allowance of £4415 above is in order to collect the unpaid tax through PAYE? I assume therefore the amount owed is not quite £4415? Is there a way to calculate how much is actually owed so we can try and figure out where this has come from?

I believe the amount owed will be the marginal tax on £4415 = 40% of £4415=£1766.

vacheron

In_For_A_Penny wrote: »

Thanks, unfortunately neither the letter nor the gov.uk website provides any insight which struck me as rather odd.

Have you claimed child benefit over the last few years? HMRC seem to be catching up on those who have been earning 50K+ but still claiming the full amount recently.

In_For_A_Penny_2

vacheron wrote: »

Have you claimed child benefit over the last few years? HMRC seem to be catching up on those who have been earning 50K+ but still claiming the full amount recently.

Been scratching our heads over this one but no, never claimed.

Phoned HMRC and they have said that it was for an underpayment of £900 in 2013/14 tax year. Can't provide any more detail. Odd considering public sector pay has been frozen and the figures make no sense. . . hey ho, who are we to argue?

BoGoF

There must be a reason for it though. When was the tax calculation issued? Have you requested a copy of it?

vacheron

In_For_A_Penny wrote: »

Been scratching our heads over this one but no, never claimed.

Phoned HMRC and they have said that it was for an underpayment of £900 in 2013/14 tax year. Can't provide any more detail. Odd considering public sector pay has been frozen and the figures make no sense. . . hey ho, who are we to argue?

One other thing that springs to mind is, did you earn any significant savings interest in previous years, (2011-12 & 2012-13)?

The reason I ask is that I once received a P800 from HMRC where they had estimated my income from savings interest in previous years and had hugely increased their estimate year on year.


I even found my original thread on the subject here: , but to summarise, this was surprising for 2 reasons:

1. The savings rates available had tanked in the intervening period, so it was unlikely that I could have even matched the previous years interest, never mind somehow greatly increasing it!
   
   
2. I had since switched the majority of my savings into an offset mortgage for this very reason, meaning that my taxable (non ISA) interest was actually close to zero.

When I called and asked them why they had used such unrealistic assumptions in their calculations which they then presented to me as "fact" their response was "we don't know"! :rotfl:

Once I had sorted that out and provided evidence to prove it I actually ended up turning a £900 claim into a £900 refund, and has cost them far more in the intervening years because it motivated me to become much more tax aware. So in hindsight they should have never bothered to "poke the sleeping tiger" with their unsubstantiated demands in the first place!