Figuring out why I paid too little tax - is it correct?

DQY

Hi all,

I'm finally sitting down to sort out some tax questions I've been sitting on a while. In Oct '22 I got a letter from HMRC saying I'd underpaid tax in the 21-22 year by about £1500. I was puzzled by this as none of the probable causes they list applied to me. I was working at the same employer, I had minimal income from interest on savings and no other sources of income. I did have a promotion and see an increase in my salary three months in, but it didn't change my tax bracket. I have a record of my salary and tax paid through the year from my payslips and my P60. How do I double check this and what could the cause have been?

Thank you!

eskbanker

What were the gross taxable income and tax deducted figures from your P60, and what was your tax code that year?

Devongardener

You should have received a statement from HMRC showing how your liability was calculated,  total income, minus your personal allowance and total tax paid.  If you didn’t, log onto your HMRC personal account and it should be there. 

Dazed_and_C0nfused

DQY said:

Hi all,

I'm finally sitting down to sort out some tax questions I've been sitting on a while. In Oct '22 I got a letter from HMRC saying I'd underpaid tax in the 21-22 year by about £1500. I was puzzled by this as none of the probable causes they list applied to me. I was working at the same employer, I had minimal income from interest on savings and no other sources of income. I did have a promotion and see an increase in my salary three months in, but it didn't change my tax bracket. I have a record of my salary and tax paid through the year from my payslips and my P60. How do I double check this and what could the cause have been?

Thank you!

Was the "letter" a tax calculation? 

A P800 or PA302?

If so what is it that you think is wrong with the calculation?

DQY

@eskbanker From P60 - Gross income £63,937.50 and tax deducted £13,499. Tax code 1133L. 

@Devongardener and @Dazed_and_C0nfused - Calcs are on the back of the letter, but I just don't understand them (it is a P800 I assume - it doesn't have this printed on it but it came with an 'understanding your P800 tax calculation' sheet). It lists my income and income tax paid (correct compared to my own records and P60), says I had untaxed interest of £120 and that my personal allowance was the standard 12,570. What I don't understand is why the tax paid via PAYE would be wrong when they had all the information through the year - it seems a large adjustment. What causes it?

Similarly, my tax code for 2022/23 is 357L: when I enter this on the MSE tax code checker it says this reflects a tax-free allowance of £3570 instead of an expected £12,570 - why the difference/why would mine be lower?

[Deleted User]

Tax due on £63937 on a code of 1133L is exactly £13499. 

Was there an underpayment from a previous year being collected in 2021/22?

molerat

Why was your tax code 1133 for 21-22 ?  The PAYE tax deducted is correct for that income but the code is only an attempt to deduct the right tax, there was likely something else that was taxable.  The calculations on the form should state exactly what taxable income they believe you received.

Again the letter you received from HMRC or your on line tax account should state exactly how that 357L code has been arrived at.

BoGoF

Did you have any benefits in kind. What exactly does the P800 show. Can you post an image redacting your personal details?

sheramber

Is there an X or M1 after the code 1133?

DQY

Hi all, apologies for disappearing - called to duties looking after my 8 week old and this is the first chance I've had to come back to this!

For the £1.5k underpayment in 2021/22:
@sheramber - no X or M1 after the code, no
@BoGoF - no benefits in kind
@molerat - the calculations on the form list, under income, my salary (as above), and £121 of untaxed interest. Then tax free allowance of £12,570, and then under income tax rates, £0.00 on the £121 interest (PSA), £7540 on £37,700 at basic rate, and £7512.80 on £18,782 at higher rate - giving a total of £15,052.
I notice that on the online account, the source of income list includes salary and then £5115 of "personal pension income". I'm puzzled by this as I do not receive a pension! Is this related to tax claimed back for contributions to my personal pension? I contributed a total of £5500 that year to my pension - a mixture of monthly amounts from my salary and a single lump sum. 

For the puzzling tax code in 2022/23:
@[Deleted User] and @molerat - the calcs for how my tax code was worked out list a personal pension annuity of £5115 - again, confusing, I do not draw a pension! - and an adjustment for tax I owe from 2021/22 (i.e. the £1.5k mentioned).

sheramber

You need to contact ahmrc and query the pension received amount.

the best time to phone is as soon as lines open.

STart dialling amnute or so beforehand to be at the front of the queue.