Underpaid tax or just an adjustment?

vikkiew

I'm struggling with the underpaid section of self assessment. Can someone explain please?

This is my last tax code for 2020-2021 with an adjustment for estimated tax owed

This is the note 7 on the back

My 2021-2022 tax code does not have any such line

Where am I supposed to put the £511 in self assessment? There are these 2 pages in the underpaid section but they are not exactly right

Page 1 is about earlier years which is not my case although why does it mention 2018-2019 and not 2019-2020? Is the help comment outdated?

Page 2 looks like my case but the dates in the video don't match. The video is https://www.youtube.com/watch?v=_-Aj7ufr7rc and the notes are for adjustments collected from April 6 2021. My note says collected by April 5 2021.

Dazed_and_C0nfused

It doesn't go on your Self Assessment tax return.

You only enter two underpayment amounts on a 2020:21 Self Assessment return,

Tax owed for a previous tax year which was included in your 2020:21 tax code

Or

Tax owed for 2020:21 included in the tax code of a later year

Your situation is tax owed for 2020:21 included in your 2020:21 tax code.

NB.  If it did need to it would be £98, the tax owed, not £511, the tax code adjustment to attempt to collect the extra £98.

vikkiew

Dazed_and_C0nfused said:

It doesn't go on your Self Assessment tax return.

You only enter two underpayment amounts on a 2020:21 Self Assessment return,

Tax owed for a previous tax year which was included in your 2020:21 tax code

Or

Tax owed for 2020:21 included in the tax code of a later year

Your situation is tax owed for 2020:21 included in your 2020:21 tax code.

NB.  If it did need to it would be £98, the tax owed, not £511, the tax code adjustment to attempt to collect the extra £98.

I understand. Thank you.

I won't owe tax for 2020-2021 after I have put in the correct figures so the question is not relevant for this year's self assessment but is it generally simpler to answer no to the first question? If I did owe for 2020-2021 I would rather just pay it off. Isn't that what most people do? HMRC claiming 2020-2021 underpaid in 2021-2022 just confuses things. Is this for people who may not have the cash to pay in one go?

For the second isn't it better to answer no even if I know I will have extra income such as savings so I can pay it off in late 2022 or early 2023 instead of during 2021-2022? What do most people choose when things are similar year to year? Is yes more popular to keep the overpaid or underpaid small so there isn't a big bill or refund? These days it may not matter but when interest rates were high wouldn't people prefer to have the cash as long as possible to earn interest on it? There isn't any discount or reward for paying HRMC earlier than needed.

Dazed_and_C0nfused

HMRC claiming 2020-2021 underpaid in 2021-2022 just confuses things

You cannot pay a Self Assessment liability for one tax year in the following tax year, there is always a years gap.

For example,

1).  Tax year 2020:21 needs to be settled so

2).  During the 2021:22 tax year you file your tax return for 2020:21. 
3).  If you owe tax for 2020:21 and you are eligible (still on PAYE, owe less than £3k and earn enough fro your tax code to collect the tax owed) them the tax owed for 2020:21 can be collected through your 2022:23 tax code.

Some people see it as interest free loan, avoiding paying the tax for between another 3 and 15 months.  Others prefer go keep things simple and a paid messing with their tax code so will always prefer to pay on 31 January.

Similar with the second question, that potentially brings forward when you will pay some tax i.e. you pay more during the tax year and less via Self Assessment.

vikkiew

Dazed_and_C0nfused said:

HMRC claiming 2020-2021 underpaid in 2021-2022 just confuses things

You cannot pay a Self Assessment liability for one tax year in the following tax year, there is always a years gap.

For example,

1).  Tax year 2020:21 needs to be settled so

2).  During the 2021:22 tax year you file your tax return for 2020:21. 
3).  If you owe tax for 2020:21 and you are eligible (still on PAYE, owe less than £3k and earn enough fro your tax code to collect the tax owed) them the tax owed for 2020:21 can be collected through your 2022:23 tax code.

Some people see it as interest free loan, avoiding paying the tax for between another 3 and 15 months.  Others prefer go keep things simple and a paid messing with their tax code so will always prefer to pay on 31 January.

Similar with the second question, that potentially brings forward when you will pay some tax i.e. you pay more during the tax year and less via Self Assessment.

Thanks again.

I prefer simple so for the first question it is a big fat NO for me. I would rather pay after each year and not have previous years clouding the picture carried over in tax codes. This question is clear now.

If I answer yes to the second question will my 2021:22 tax code be updated with the figures from 2020:21 for untaxed savings interest? If I answer no will my 21:22 tax code have the untaxed savings interest line removed? I thought figures like untaxed savings interest carried to the next year unless HMRC were informed otherwise, does answering no equate to informing HMRC these extras should be zero? If I say no and submit in a few months with most of 21:22 already over and the tax code had been adjusted for most of the year showing untaxed interest being deducted as in my first message's attachment how would HMRC balance this change? Would there be new line for estimated overpaid tax?

vikkiew

Any feedback on my last questions?

Dazed_and_C0nfused

If I answer yes to the second question will my 2021:22 tax code be updated with the figures from 2020:21 for untaxed savings interest?
Should be yes

If I answer no will my 21:22 tax code have the untaxed savings interest line removed?
Not sure about that but I don't think so

 I thought figures like untaxed savings interest carried to the next year unless HMRC were informed otherwise, does answering no equate to informing HMRC these extras should be zero?
They do get carried forward.  I suspect answering no means your tax code won't get reviewed after you file your tax return

If I say no and submit in a few months with most of 21:22 already over and the tax code had been adjusted for most of the year showing untaxed interest being deducted as in my first message's attachment how would HMRC balance this change?
See above, I don't think this will change

 Would there be new line for estimated overpaid tax?
No, even if the tax code was changed HMRC don't include an overpaid tax adjustment like they do for underpaid tax.  Say your current tax code was 1125L and the interest was removed leaving you with a new tax code of say 1257L then the first time your employer operates the new, higher, tax code they will make any refund due by adjusting your PAYE deduction that week or month.