HMRC Tax Bill repayment query

rick.mcfc

Hello,
Looking for some advice please. I’m on PAYE and just received a tax bill from HMRC saying I’ve underpaid by £1,108 in 2019/20. 

I changed employers several times that year which hasn’t helped, and remember massively underpaying tax in February 2020 (nothing I did wrong, my payslip just showed me massively underpaying in that month which was annoying). I’m not disputing the underpayment really on that basis.

My question is, should I repay through my tax code in 2021/22, or pay it off in one go now. I want to know how much extra in tax per month I’ll be paying if I do it through the tax code - logic says it’ll be £1108/12, so around £92 per month. Is that fair to say or is it not that simple?? My current tax code is 1180L, so what would my new tax code be? Would it reduce to 1069L, or again is it not that simple?
Keen to avoid getting shafted every month for the next year if I can help it, and if it’s worth paying off in full now to avoid that then so be it.

Thanks in advice for any help.

Rick

Dazed_and_C0nfused

If everything goes to plan then yes you would pay an extra £92/month throughout the 2021:22 tax year.

If the tax rates stay the same as they are this year and whatever is dropping your tax code from 1250L to 1180L remains the same them the tax code for 2021:22 would be 554L.

Your code would drop by 554 (5,540 tax code allowances.  This means your employer would deduct and extra £1092 (£5,540 x 20% = £1,108).

Some would see it as interest free loan from HMRC, others would rather pay it and get it out of the way.  The choice is yours.