Wrong tax code last year - what happens next?

sparky0138

A few months ago I realised that my tax code was slightly wrong for the 23-24 tax year (1253L). I sent HMRC a letter in April and a couple of months later the status said "completed" on my online tax account.

About a week later I received an e-mail to say that my current tax code had changed but when I logged in my tax code has stayed exactly the same (1257L).

I haven't received any other communication so I don't know what exactly they've completed and I've never had this happen before so I don't know what to expect.

Has anyone else experienced anything like this? Is it possible I'll receive a P800 letter in the autumn or should I contact them to find out what they did? I tried phoning this morning but didn't feel like waiting 40 minutes. Thanks.

horsewithnoname

If you’re not too fussed about the - from what you’ve said - small refund of tax due for last year, it will be dealt with eventually. 

Like the rest of the public service it has been under resourced for years and serving an ever increasing number of people, so it all takes a lot longer. 

If you want to ring, then first thing in the morning (8am) is generally favourite to get a quicker response. 

Phoenix72

Your post doesn't make sense. You say it was 1253L but when you went back in, it was 'unchanged' at 1257L.

Assuming it was changed from 1253L to 1257L you would have barely noticed a difference as, for a basic rate taxpayer, it only equates to £8 over the year.

What was the final code on your last payslip or P60?

Dazed_and_C0nfused

horsewithnoname said:

If you’re not too fussed about the - from what you’ve said - small refund of tax due for last year, it will be dealt with eventually. 

Like the rest of the public service it has been under resourced for years and serving an ever increasing number of people, so it all takes a lot longer. 

If you want to ring, then first thing in the morning (8am) is generally favourite to get a quicker response. 

Not sure how you deduce that from the original post

The op hasn't said if they are paying tax or not and if they are then the new tax code is likely to have resolved any immediate issue.

molerat

If your tax code has been changed then the make up of the old and new will be shown in your on line tax account.  It may be that any underlying additions and deductions have been changed but it has had no effect on the code.

sparky0138

molerat said:

If your tax code has been changed then the make up of the old and new will be shown in your on line tax account.  It may be that any underlying additions and deductions have been changed but it has had no effect on the code.

It is only a small amount. My apologies for any confusion. My tax code for 23-24 was 1253L. I received a new tax code of 1257L at the start of the new tax year. It was then that I realised the previous year had been wrong and I contacted them. In June I received an e-mail to say that my tax code (1257L) had changed but when I checked it was still the same.

However, this comment by @molerat made me look in more detail. My account still says my annual tax-free amount is £12,570 but when I click on "Check your income tax estimate" it says the income I do not pay tax on is £12,610 which in effect is a 1261L tax code and that sounds like the correction but if my tax code has officially stayed the same, how would my employer know? June's payslip said 1257L, as does the forecast on my employer's salary portal. Is this the kind of thing that would be corrected by HMRC (P800) after the end of the current tax year?

Apologies (again!) for all the questions, I've only recently started paying tax for the first time due to the freeze in the personal allowance.

molerat

Have you clicked on the green "View detailed Income Tax estimate" box ?  That will break down that tax free income, it will include other non taxed items such as dividends and interest - the total income "You do not pay tax on" although technically you may pay tax on some of it at 0%.

sparky0138

molerat said:

Have you clicked on the green "View detailed Income Tax estimate" box ?  That will break down that tax free income, it will include other non taxed items such as dividends and interest - the total income "You do not pay tax on" although technically you may pay tax on some of it at 0%.

Thanks but that's just confused me even more. Looking at that, it appears the £40 difference in the income I'm not going to pay tax on this year is due to the starting rate for savings and not the wrong tax code the previous year? Which also happens to be £40.

eskbanker

sparky0138 said:
My account still says my annual tax-free amount is £12,570 but when I click on "Check your income tax estimate" it says the income I do not pay tax on is £12,610 which in effect is a 1261L tax code

You're mixing up tax codes (used to drive PAYE deductions) and actual tax liabilities (which include tax due on other income).  The fact that you can earn £12,570 from employment income and another £40 from savings interest without any tax liability (the latter figure could actually be many thousands because of the starting savings rate) doesn't necessitate any change from a 1257L tax code.

If the above projected figures for 2024/25 are in the right ball park then no need to do anything, as it seems the right amount of tax will be deducted for this year.

If your P800 for 2023/24 shows that a modest payment (in one direction or the other) is needed then cross that bridge if/when you get to it, but in itself there's nothing to suggest that your 2023/24 tax coding is 'wrong' as such - was your 2023/24 employment income somewhere near £12,530?

sparky0138

eskbanker said:

If your P800 for 2023/24 shows that a modest payment (in one direction or the other) is needed then cross that bridge if/when you get to it, but in itself there's nothing to suggest that your 2023/24 tax coding is 'wrong' as such - was your 2023/24 employment income somewhere near £12,530?

My income for 23-24 was £12,941 and I paid £80.40 in tax. Given that my tax code for that year was 1253L and not 1257L, if I hadn't realised it was wrong and contacted them, would their system have been able to recognise an error and automatically generated a P800?

Dazed_and_C0nfused

sparky0138 said:

eskbanker said:

If your P800 for 2023/24 shows that a modest payment (in one direction or the other) is needed then cross that bridge if/when you get to it, but in itself there's nothing to suggest that your 2023/24 tax coding is 'wrong' as such - was your 2023/24 employment income somewhere near £12,530?

My income for 23-24 was £12,941 and I paid £80.40 in tax. Given that my tax code for that year was 1253L and not 1257L, if I hadn't realised it was wrong and contacted them, would their system have been able to recognise an error and automatically generated a P800?

Assuming the £12,941 is all earnings or pension income and not interest or dividends then yes.  And no!

£12,941 gives a liability of £74.20 and as you paid £80.40 you overpaid £6.20.

If your £12,941 includes interest or dividends then the £6.20 figure will be different.

But there was a poster a few weeks/months ago who had an issue with HMRC and claimed they don't normally refund amounts less than £10 (the poster originally said £50 but clarified things with HMRC and that was wrong, but they said the £10 is correct).

But you can insist on the £6.20 being repaid even if that doesn't happen automatically.

https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye91045