Help with tax paid this month

Waldo_Pepper

Hi all,
I received a notice of my new tax code in early September suggesting that I owe just under £2000 for the year April '18 - April '19, and that my tax code adjustment would allow this to be collected in equal instalments from now until April '19, ie. around £285 extra p.m. (they will do this by reducing my tax free allowance by £8000 or so).

However, checking this month's payslip, I have paid around £700 extra in tax and I can't for the life of me work out why.

The only thing I can think of is that I filled in a self assessment in August for 2017 - 18 and that showed a balance on account of £360 to pay. Would this have been added to this month's tax? It was my understanding that this would be taken through a tax code adjustment as well. Thanks for any help you can give.

Linton

My guess from the minimal info:
When your tax code changes, unless it is switched to M1 or X. your new code is restrospectively applied to all months back to the start of the tax year so you have about 5 months when you have paid insufficient tax.



Asuming you are a basic rate tax payer if your tax code is reduced by £8K that would mean you paying 20%X£8K=£1600 more tax. 5/12 X £1600=£667.

dori2o

The code should have been operated on a Mth1 basis in order to collect the additional tax over the remaining 6 months of the tax year.

Can you check your payslip and see if there is an X, or Mth1 or NonCumul after the tax code number?

If there isn't then the code has been operated on a cumulative basis meaning the tax underpaid will have been collected in this month. To check this you will need to provide your total pay and total tax to date figures plus the tax code.

You will need to check with HMRC whether the code was correctly issued on a Mth1 basis. If it was it's possible your employer might have operated the code incorrectly.

The alternative is HMRC issued the code incorrectly.

In either case if this is going to cause hardship the only option is to ask your employer if they will consider rerunning your monthly salary using the right code (which HMRC can fax over if necessary). However, it is entirely at your employers discretion and they cannot be forced to do so no matter who is at fault.

If it is HMRC who have issued the code on the wrong basis they will need to recalculate the code or you will end the year having overpaid tax.

Linton

I agree with dori20 but the problem is that if the tax code should be M1 by the end of the year insufficient will have been taken to pay off the tax bill. Unless of course the OP is a higher rate tax payer. So it would be useful to know the old and new tax codes and whether HRT is a factor.