HMRC letter

Locornwall

For several years now I’ve gone over the threshold to repay child benefit and as such had to pay it back after self assessment. This tax year I have had the money come out of my pay in a reduction in my personal allowance. This was for tax year 2018-2019.

I submitted my self assessment late last year for the tax year 2019-2020. This meant again paying back the child benefit, which I chose to do in the remaining 3 months of this tax year. Therefore, my personal allowance was reduced from £12500 to £3700. I noticed this significant reduction in my pay for the past 3 months.

Today I received a bill from HMRC stating I owed them the money for self assessment which is close to the amount I owed in child benefit. I tried calling them but was kept waiting over 30 ministers.

What am I supposed to do? How do people work these things out at HMRC. It is very worrying.

Dazed_and_C0nfused

To keep things as simple as possible you need to look at each year on its own.

And don't forget your tax code is just a mechanism to collect some tax during the year, it is your Self Assessment return which finalises matters.

So for 2018:19 you were paying any extra owed by a deduction in your 2020:21 tax code?

When did you file your 2019:20 tax return?  You cannot ever pay the High Income Child Benefit Charge for 2019:20 through your 2020:21 tax code as you send to believe you have.

I submitted my self assessment late last year for the tax year 2019-2020. This meant again paying back the child benefit, which I chose to do in the remaining 3 months of this tax year

That will almost certainly have been a provisional amount towards the High Income Child Benefit Charge due for 2020:21, not 2019:20.

sheramber

 This tax year I have had the money come out of my pay in a reduction in my personal allowance. This was for tax year 2018-2019.
...................This meant again paying back the child benefit, which I chose to do in the remaining 3 months of this tax year. Therefore, my personal allowance was reduced from £12500 to £3700. 

if you were paying back child benefit for 2018/19 in this year's tax code your personal allowance would not be 12500

Locornwall

sheramber said:

 This tax year I have had the money come out of my pay in a reduction in my personal allowance. This was for tax year 2018-2019.
...................This meant again paying back the child benefit, which I chose to do in the remaining 3 months of this tax year. Therefore, my personal allowance was reduced from £12500 to £3700. 

if you were paying back child benefit for 2018/19 in this year's tax code your personal allowance would not be 12500

Exactly right.

initially they reduced my tax code for 2020/2021 to pay back child benefit for the year 2018/2019. This was reduced from 1250 to 944L and then reduced again to 834L until December 2020 after I submitted my self assessment for 2019/2020 and then opted to have this tax year (2019/2020) deducted in the current tax year (2020/2021) pay. That’s when I it was reduced to 374L. It made sense and the amount seemed to resemble the amount I owed.

I then received this letter yesterday, tried calling them but waited over 30 minutes.

it really is worrying how they can just send out these letters without a detailed explanation. At face value it appears a mistake and if so I expect accountability. 

Locornwall

Dazed_and_C0nfused said:

To keep things as simple as possible you need to look at each year on its own.

And don't forget your tax code is just a mechanism to collect some tax during the year, it is your Self Assessment return which finalises matters.

So for 2018:19 you were paying any extra owed by a deduction in your 2020:21 tax code?

Yes that’s right.

When did you file your 2019:20 tax return?  You cannot ever pay the High Income Child Benefit Charge for 2019:20 through your 2020:21 tax code as you send to believe you have.

I submitted my self assessment late last year for the tax year 2019-2020. This meant again paying back the child benefit, which I chose to do in the remaining 3 months of this tax year

That will almost certainly have been a provisional amount towards the High Income Child Benefit Charge due for 2020:21, not 2019:20.

Then there has been some mistake. Why was my tax code reduced so much December to March down to 374L? But I am sure I was given that option to pay it back this tax year.

Half the problem is getting in touch with them. I’m sorry but the covid excuse is wearing a bit thin now.

Dazed_and_C0nfused

If you owed money for 2019:20 through Self Assessment and wanted that collecting via your tax code it would be an adjustment to your 2021:22 tax code, not 2020:21.

It works on a 3 year cycle, for example,
1. You file your 2019:20 tax return
2. during the 2020:21 tax year and, if possible/required,
3. the Self Assessment amount for 2109:20 owed is collected via your 2021:22 tax code or you pay of direct to HMRC by 31 January 2021.

The change to your 2020:21 tax code will be to collect additional tax for 2020:21, not what you owe from your 2019:20 Self Assessment.

It would help if you told us the breakdown of your 2020:21 tax code along with the Self Assessment amount owed from 2018:19 and 2019:20.

unholyangel

Locornwall said:

sheramber said:

 This tax year I have had the money come out of my pay in a reduction in my personal allowance. This was for tax year 2018-2019.
...................This meant again paying back the child benefit, which I chose to do in the remaining 3 months of this tax year. Therefore, my personal allowance was reduced from £12500 to £3700. 

if you were paying back child benefit for 2018/19 in this year's tax code your personal allowance would not be 12500

Exactly right.

initially they reduced my tax code for 2020/2021 to pay back child benefit for the year 2018/2019. This was reduced from 1250 to 944L and then reduced again to 834L until December 2020 after I submitted my self assessment for 2019/2020 and then opted to have this tax year (2019/2020) deducted in the current tax year (2020/2021) pay. That’s when I it was reduced to 374L. It made sense and the amount seemed to resemble the amount I owed.

I then received this letter yesterday, tried calling them but waited over 30 minutes.

it really is worrying how they can just send out these letters without a detailed explanation. At face value it appears a mistake and if so I expect accountability. 

On your previous tax code, what was your estimated income? How does that compare to the income on the new tax code? What breakdown is given for the tax code deductions?

I don't think they're trying to collect the tax for 19/20 in your current tax code. But I think perhaps a change in earnings may mean paying back a higher percentage.

A reduction from 834 to 374 late december, would only collect about an extra £460 in tax between January and March

 

Locornwall

2020

944L April, May, June, July
834L non-culmulative August, September, October, November
373L non-culmulative December, January, February, March

Self assessment owed
2018/2019 £1317
2019/2020 £919

[Deleted User]

Dazed has it correct in his first post. There is an underpayment for 2018/19 and 2019/20. Having processed the latter HMRC could well  adjust the 2020/21 tax code to mitigate the underpayment for 2020/21 (presumably because there will be a similar occurrence in that year) albeit for only three months.

Dazed_and_C0nfused

Locornwall said:

2020

944L April, May, June, July
834L non-culmulative August, September, October, November
373L non-culmulative December, January, February, March

Self assessment owed
2018/2019 £1317
2019/2020 £919

Ok, so if you look closer I would hope, based on what you have posted in this thread, that the 944L, 834L and 373L codes all include an adjustment to collect £1,317.

But none of them will include an adjustment to collect £919.

As purdyoaten2 says the 373L code will likely have been reduced to ensure you pay more towards the tax due for 2020:21, helping reduce the amount which will be owed when you file your 2021:21 Self Assessment return.

Locornwall

Ok so that makes sense if I may say.

a reduction to 374L means a significant more tax paid. I guess I will only be able to see if it’s more than required at the end of the tax year, add up the gross pay, taxable pay etc and see if I e paid too much income tax?