Underpaid Tax & Maternity Allowance

miss_saski

Hello,

I currently owe HMRC money due to underpaying tax last year. This is currently coming out of my wages each month.

I started a new job in April this year, and found out soon after starting this job that I was pregnant. I believe that this means I will be missing out on SMP due to not being employed with this new employer for long enough, so will be on maternity allowance which is not taxable. I currently plan to go on maternity leave from work early November and return in the Summer.

Please feel free to correct anything I may have misunderstood! 

Does this mean what I owe HMRC will roll over to next year or will I get a reduction on my MA payments due to owing tax?

I have the funds avaliable now to pay what I owe but would prefer to keep it for a "rainy day" if possible. 

Any advice would be appreciated!

[Deleted User]

What is likely to happen is that a calculation will be issued for 2022/23 - around September 2023 - but don’t hold your breath! The underpayment carried forward will appear, hopefully with the same method of collection in 2023/24. Don’t take this as gospel - this is what would have happened when I worked for HMRC. Hopefully done current employees will advise further!

chrisbur

Without figures difficult to say what will happen but you say this owed tax is currently being taken from your wages, is this being done by a reduction in your tax code, thus increasing the tax you pay?  If this is the case then when you have no wages and assuming that you have paid tax then this adjustment will continue by reducing the tax refund you receive.  Assuming enough tax to refund and HMRC doing their sums correctly this would clear the underpaid tax.

[Deleted User]

chrisbur said:

Without figures difficult to say what will happen but you say this owed tax is currently being taken from your wages, is this being done by a reduction in your tax code, thus increasing the tax you pay?  If this is the case then when you have no wages and assuming that you have paid tax then this adjustment will continue by reducing the tax refund you receive.  Assuming enough tax to refund and HMRC doing their sums correctly this would clear the underpaid tax.

Good point - likely that the op will be overpaid in this tax year in not utilising five months allowances. The bottom line is that she should not be worrying unduly, or not at all!

miss_saski

chrisbur said:

Without figures difficult to say what will happen but you say this owed tax is currently being taken from your wages, is this being done by a reduction in your tax code, thus increasing the tax you pay?  If this is the case then when you have no wages and assuming that you have paid tax then this adjustment will continue by reducing the tax refund you receive.  Assuming enough tax to refund and HMRC doing their sums correctly this would clear the underpaid tax.

Thank you for your replies! And apologies for not going into specific amounts. I receive paper wage slips, and did not have them to hand.
Yes my tax code is currently 868L so I am currently paying more tax on my wages.
I had not even thought of a refund - am so used to hearing HMRC taking away that I forgot that they can give as well! 
I am probably just overthinking all of this - you guys have certainly helped settle my mind a little

chrisbur

What happens when you have no salary will depend on whether that tax code is cumulative or non-cumulative.  It is possible that you might end the year over paying tax if you want any guidance it would be best to leave it until you finish work and have had your last payday with earnings; when you would need to post taxable pay to date tax paid to date date of payment and the tax basis ie. cumulative/non cumulative.  Either way if you do over pay a bit you will get it back eventually so nothing to worry about.