Seizure of underpaid tax

Anniliggi

A family member was notified earlier this tax year that due to an HR slip their code was wrong and insufficient tax had been paid for quite some time. They understood that the outstanding £1600 would be recovered in instalments over the new tax year, which was itself going to be difficult.
Today they found that £1600 has been deducted from this month’s salary. They are a single parent, already financially stretched,  who is now unable to pay the mortgage or fuel bills. 

What steps to take?

Dazed_and_C0nfused

I would suggest that as a matter of urgency the family member compares the tax code on their March payslip (which falls in the 2021:22 tax year) with the tax code HMRC notified for 2022:23.

If they are the same, and a different tax code was used on the February payslip it seems the employer may be at fault.

biscan25

I think there's a maximum HMRC can reclaim using a K code (50%?). Not sure if the deduction is in excess of this.

[Deleted User]

biscan25 said:

I think there's a maximum HMRC can reclaim using a K code (50%?). Not sure if the deduction is in excess of this.

That is correct - obviously depends on the op’s earnings but perhaps another payroll error?

chrisbur

biscan25 said:

I think there's a maximum HMRC can reclaim using a K code (50%?). Not sure if the deduction is in excess of this.

This 50% maximum rule was recently changed now applies to all tax codes not just K codes.

sheramber

Who notified her of the underpaid tax? HR or HMRC?

Has HMRC  advised to collect the  underpaid tax or has HR just used the correct code and deducted the full amount? 

MalMonroe

Your relative should go to that HR department as soon as possible and let the person in charge know what has happened and that they need a loan to help them in the short term. The error was no fault of your relative's and they will be in financial dire straits because of it. The employer was at fault and has admitted it and so they should help.

Although I really do feel sorry for your relative this incident highlights the importance of checking tax codes regularly. I'm in receipt of pensions now but I always check my code at the beginning of a new financial year. It's usually wrong and has been, ever since I retired. My income isn't high enough for me to pay any tax but I'm always allocated incorrect codes. 

It's so easy to check these days, too because we have the advantage of our online HMRC tax accounts. Your relative could log on (or register, then logon) and send HMRC a message to the effect that they understood the underpayment would be reclaimed over the next tax year.