Confused about tax

Timothyayre

The actual total taxable income from my main job in the tax year 2022-23 will be £44,729. The total taxable income from my second job will be £9054. This second job is very variable, and the amount I earned in 2022-23 is very unusual. Usually I would only earn about £2000 taxable income. 

On Government Gateway, the estimate for my second job is wrong. I assume this is because everything is estimated. It is down as £4052 for 2022-23. They have estimated my income in 2023-24 to be £9054, presumably based on this past year, but it most likely will be a lot lower. 

To complicate things, I am claiming marriage allowance. Ordinarily I earn below the 40% threshold and likely will be below it in 2023-24. 

I understand that I need to pay something back for exceeding the marriage allowance threshold in this past tax year, in addition to the extra tax that I have not paid on earnings over the 40% threshold in 2022-23.

According to Government Gateway, my code is going to change from 1404M to 1203M and they have applied an "Adjustment to Rate Band" of £2005 for the next tax year. 

Is the £2005 the amount I owe and does this sound about right? I very roughly calculated that I would need to pay an extra £700 tax for earnings above the threshold and then about £500 for the marriage tax allowance. But I probably got this wrong and am missing something. 

To make things even more complicated, I am going to have to pay the Higher Child Benefit Charge as my wife claims child benefit. I normally do not do self assessment but presumably I will need to register for this?

I imagine I will need to contact HMRC for some clarity but my experience with them has not always been great so thought I would ask here first!

tacpot12

I think the £2005 is the amount of extra income that HMRC wants your employer to tax you on, so that you pay an amount of tax that is closer to what they think you should be paying. 

As far as I know, you can call HMRC and ask them to lower their estimate of what you will earn in your second job and reissue you with a new tax code.

To pay the Higher Child Benefit Charge you will either have to sign up for Self-Assessment, or your wife will have to opt-out of claiming child benefit. 

There are details here: High Income Child Benefit Charge: Overview - GOV.UK (www.gov.uk)

Most importantly if she does opt out of claiming child-benefit, she should still claim her entitlement (but not the payment) so that she gets NI credits.

Doing Self-Assessment each year is a bit of a pain, and quite nerve-wracking the first couple of times you do it, but I have a spreadsheet where I collect all the data I need and just copy the spreadsheet each year to remind me what data I need and where it goes to (which box) on the Self-Assessment forms. Once you have done it a couple of times, it's not too bad.

I'm not sure whether it would be better to do the Self-Assessment or to opt out. Perhaps others will have more experience of this and can advise better. 

You might also serach the forum for advice people have bene given previously. The topic comes up regularly, but I don't tend to read the threads as only have adult children now. 

molerat

They have estimated my income in 2023-24 to be £9054, presumably based on this past year, but it most likely will be a lot lower.

So change it to where you think it should be.  Your code will possibly then change.

Is the £2005 the amount I owe and does this sound about right?

No, you will pay tax on an extra £2005 so at 20% an extra £401.

What code have they given to the second job ?

[Deleted User]

molerat said:

Is the £2005 the amount I owe and does this sound about right?

No, you will pay tax on an extra £2005 so at 20% an extra £401.

Yes - but, given their estimate. HMRC will be looking to collect £802. 

Timothyayre

The second job is BR. So does their calculation even take into account the fact that I would need to pay marriage allowance back?

Timothyayre

tacpot12 said:

I think the £2005 is the amount of extra income that HMRC wants your employer to tax you on

Thank you. 

What I am confused about is that I have definitely underpaid tax so is this change in code an attempt to recover that underpaid tax from 2022-23 or just because they think I will need to pay more tax in the future?! 

Dazed_and_C0nfused

Timothyayre said:

tacpot12 said:

I think the £2005 is the amount of extra income that HMRC wants your employer to tax you on

Thank you. 

What I am confused about is that I have definitely underpaid tax so is this change in code an attempt to recover that underpaid tax from 2022-23 or just because they think I will need to pay more tax in the future?! 

No, it's definitely not an attempt to do that.

With the potential for higher rate tax relief, keeping Marriage Allowance and avoiding some HICBC you have a compelling case to make some additional pension contributions before 6 April.

Has Child Benefit been received for the whole of 2022:23 and if so for how many children?

Timothyayre

Ah I see. In which case I definitely need to adjust the estimates as they will still recover the underpaid tax at some point? We received child benefit from May 2022 for 1 child.