Underpayment of tax every year.

carpinteria19

For several years now I have received notifications from H.M.R.C. stating I've underpaid tax. The notifications state what tax I should have paid and how it will be collected through coding, it never tells me why H.M.R.C. failed to collect the correct amount of tax. My income is from fulltime employment, state pension, armed forces pension and three private pensions. I have now received three notification 1. tax year 2017 to 2018 I owe £2118.40 to be paid by 21/04/2020. 2. tax year 2018 to 2019 I owe £799.20 to be paid by 21/04/2020. 3.tax year 2020 to 2021 I owe £854.00 to be collected through tax code adjustment. I have not queried the amounts as the paperwork appears to suggest the amounts are correct, but when I ask why it keeps occurring I am advised that it is because I have several sources of income. What I have managed to ascertain is that for several years to collect the underpaid tax they have used my armed forces pension as this is a reliable source of income , I have now been advised that because of the 50% rule my armed forces pension was insufficient to collect the owed amount. Can you advise me on a course of action to take as I think that throughout the whole situation I have been willing to pay the outstanding taxes through the coding system as they required me to do, and because of H.M.R.C.'s failure to administer my P.A.Y.E they have presented me with a bill of £3000.00 to be paid in a lump sum, which I am not in a situation to pay.

Jeremy535897

It sounds as if you haven't made the payment due on 21 April 2020? If you can't pay it in one go, you should agree a paymernt plan. There will be interest to pay. See https://www.gov.uk/difficulties-paying-hmrc

yorkiechick

You need to be looking at your tax codes for each source of income. The most common explaination is that you are having your personal allowance set against more than one income, which will lead to an underpayment.

chrisbur

To understand what is happening you need to give full details of taxable gross, tax paid, and tax code used. To start with for last tax year.
Details of HMRC calculation given to you would help as well.

carpinteria19

Many thanks for the replies. Am I right in saying that it is my responsibility to check each tax code and ensure that I am paying the correct amount of tax through the P.A.Y.E. system. I would have thought that if I receive notification of tax liability for a tax year, in which H.M.R.C. inform me of what I am forecast to earn, then issue me with tax codes for each source of income which are calculated to collect the correct amount of tax due, then it is a failure of the system when the correct amount of tax is not collected.
Surely it is wrong that an unfair financial burden is placed upon the tax payer through no fault of there own. 

glider3560

carpinteria19 said:

Am I right in saying that it is my responsibility to check each tax code and ensure that I am paying the correct amount of tax through the P.A.Y.E. system.

Yes, it is your responsibility to check the tax codes are correct.  

To get some useful advice here, could you post your estimated annual income from each job/pension and the tax code each one is using at the moment.  We can then suggest a different combination of tax codes that will stop you underpaying in the future.

carpinteria19

State Pension £9052.00pa, Employment £12,147.00pa Tax Code S1250L, Armed Forces Pension£3055.00pa Tax CodeSBR M1, Civil Service Pension £990.00pa Tax Code S91T, Annuity £835.00 pa, Tax Code SD0 Month1, Annuity £993.00pa Tax CodeS99t Month1.Private Pension £702.00pa Tax Code SD0 M1

Dazed_and_C0nfused

The most important thing by some way is that your main tax code (the one with L at the end) doesn't take into account your State Pension so as no tax is deducted by DWP (it never is from State Pension) then you will owe a large amount each year.

You need to get this corrected asap.

The S91T and S99T codes should probably also be either SBR or SD0.

The five Scottish rates make it a bit messier but you have no spare allowances from your combined employment and State Pension so you need to be paying 20 or 21% on all the little bits.

unholyangel

carpinteria19 said:

State Pension £9052.00pa, Employment £12,147.00pa Tax Code S1250L, Armed Forces Pension£3055.00pa Tax CodeSBR M1, Civil Service Pension £990.00pa Tax Code S91T, Annuity £835.00 pa, Tax Code SD0 Month1, Annuity £993.00pa Tax CodeS99t Month1.Private Pension £702.00pa Tax Code SD0 M1

Do you have any other allowances or reliefs other than the personal allowance?  Because the parts in bold would require a total allowance of ~23452. State pension should be in your tax code as a reduction. Given your multiple sources straddling the rate bands, I would also expect a further reduction for an adjustment to rate band. 

What does your personal tax account say the codes are?

carpinteria19

I have a further transfer allowance of £1191.00. My most recent tax code notice 2020-2021 has my employment as S34M. Armed Forces pension as SBR. Private pension as SD0. Civil Service Pension as SD0. and both Annuities as SD0.

xylophone

This looks very odd - I don't think I've come across a case where HMRC didn't adjust the PA for state pension.

OP, for how long have you been in receipt of state pension?