Personal Tax allowance - HMRC Error

71peyman71

Not sure if this is the right thread for this but I couldn't find another that was about personal tax. 

I have just received a letter from HMRC estimating my new tax free allowance for 2022-2023 to £6870, down from £1250. 
Shocked, I logged into my online account to find that they have estimated my earning from April to be £111K. This is almost twice as much as my current salary. The online information also says that I will pay 19K more tax next year than I did this year!! 

I am shocked. 
 
Now, either they know something that I don't and I am being promoted by my employer, or they have made a huge mistake. I spent ages on the phone to try to speak to someone but eventually gave up. 

I entered what my salary will be from April but I want to know how they make these estimates and why it is so wildly wrong? Is this common? I don't have a second income either so totally surprised.

[Deleted User]

Go back to the online account and change the estimate for income 2022/23 to what you estimate that it should be!

Or telephone HMRC now (open to 8pm) or at 7.59 tomorrow morning.

https://www.gov.uk/government/organisations/hm-revenue-customs/contact/income-tax-enquiries-for-individuals-pensioners-and-employees

As to the reason - did you change jobs recently?

71peyman71

[Deleted User] said:

Go back to the online account and change the estimate for income 2022/23 to what you estimate that it should be!

Or telephone HMRC now (open to 8pm) or at 7.59 tomorrow morning.

https://www.gov.uk/government/organisations/hm-revenue-customs/contact/income-tax-enquiries-for-individuals-pensioners-and-employees

As to the reason - did you change jobs recently?

No my job is exactly the same, same company. 

Obviously it's a mistake. I just want to know what information they base it on. Is it something they have received from my employer? Surely if it's a pay rise (which I doubt very much), my employer should notify me first.

I already changed it on the site so we will see. I login again on Friday to see. 

Dazed_and_C0nfused

It's usually based on the Real Time Information data supplied by your employer.

In theory it should be something like your latest taxable pay from that employer (say from your month 9 or 10 pay details in 2021:22) and that is then converted into an annual figure to use for 2022:23.

It may also have a small inflation increase added, not sure if that still happens.

There is an explanation here,

https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye13090

What do your last couple of payslips show your year to date taxable pay amount as?

On-the-coast

This happenned to me at the start of this tax year (est. earnings calculated as 165k...)
The online calculation said it was based on what my employer had provided.
My employer effectively shrugged and said my tax was a matter between me and HMRC.
I changed the forecast on the government tax gateway and all was well...(although i did have one month with no tax free allowance applied, which then resulted in an uplifted tax code to slowly pay the overpaid tax back to me).
You'll be fine (although depending on where you are in the pay cycle you might have one month of less takehome pay than is correct, and there's nothing much you can do about it...

[Deleted User]

On-the-coast said:

This happenned to me at the start of this tax year (est. earnings calculated as 165k...)
The online calculation said it was based on what my employer had provided.
My employer effectively shrugged and said my tax was a matter between me and HMRC.
I changed the forecast on the government tax gateway and all was well...(although i did have one month with no tax free allowance applied, which then resulted in an uplifted tax code to slowly pay the overpaid tax back to me).
You'll be fine (although depending on where you are in the pay cycle you might have one month of less takehome pay than is correct, and there's nothing much you can do about it...

He will be fine - the code is for 2022/23. Plenty of time before the new tax year.

penners324

Large bonus in months 10, 11 or 12 of 21/22.....

71peyman71

Thanks everyone. 

My bonus is 20% and was paid in February 2021. It was taxed at source. Next bonus of 20% is paid at the end of this month. 
It still is way short of the estimate. 

Anyway, I have changed it on my account and I am sure it will all be fine in the end. 

I was quietly hoping I was given a huge pay rise though  

sheramber

HMRC assumes that that increased pay amount s are continuing. They don't know it is a one off bonus.

Thrugelmir

Very easy and simple to log on and revise estimates now. Only takes a minute. 

[Deleted User]

sheramber said:

HMRC assumes that that increased pay amount s are continuing. They don't know it is a one off bonus.

So not an HMRC error on that basis. They seem to have acted quite quickly here on the basis of the information received through RTI. 

As so said in my first post - very easy to rectify.