HICBC through tax code - timing

daveaspy

Possibly a slight misunderstanding on my part here so just checking 

I did my self assessment for 23-24 a few weeks ago, this was the first time I went over the HICBC threshold after deductions. I expected to have to repay that years CB through my 25-26 tax code as we are alreadying in a new tax year, but I've now had a tax code notice claiming it this year - is that right?

What would have happened if I'd done my SA in December 24? Would I have had to pay it in a lump?

[Deleted User]

daveaspy said:

Possibly a slight misunderstanding on my part here so just checking 

I did my self assessment for 23-24 a few weeks ago, this was the first time I went over the HICBC threshold after deductions. I expected to have to repay that years CB through my 25-26 tax code as we are alreadying in a new tax year, but I've now had a tax code notice claiming it this year - is that right?

What would have happened if I'd done my SA in December 24? Would I have had to pay it in a lump?

Are you sure? If you have asked for the underpayment to be collected through your PAYE code it should happen in the 2025/26 tax year. 

The adjustment for 2024/25  is almost certainly to prevent/minimise the underpayment that would also arise by the end of this tax year. I would imagine that there is an ‘X’ or M1 after it to ensure that the correct tax is paid between now and April with the period from April to now to be reviewed subsequently. 

Had you submitted your return after 30th December 2024 the full underpayment would be due and payable by 31st January 2025. 

Dazed_and_C0nfused

daveaspy said:

Possibly a slight misunderstanding on my part here so just checking 

I did my self assessment for 23-24 a few weeks ago, this was the first time I went over the HICBC threshold after deductions. I expected to have to repay that years CB through my 25-26 tax code as we are alreadying in a new tax year, but I've now had a tax code notice claiming it this year - is that right?

What would have happened if I'd done my SA in December 24? Would I have had to pay it in a lump?

You have misunderstood what has happened.

There are two questions near near the end of the return relating to tax owed and keeping your tax code upto date.

Firstly, any Self Assessment liability owed for 2023-24 which can be collected via your tax code would be included in your 2025-26 tax code.  The tax code entry would refer to tax underpaid, not HICBC.  Your 2024-25 tax code has not been adjusted to collect this.

The second question is about keeping your current tax code up to date.  Presumably you completed the return agreeing to this and as a result HMRC have updated your tax code to collect more tax for 2024-25 during the year, so in theory you will less tax to pay via Self Assessment.  I would guess the 2024-25 tax code adjustments are for Child Benefit and possibly an underpayment.  This underpayment relates to the 2024-25 tax year and is not collecting tax from 2023-24.

If you made a mistake on your return and don't want your current code amending then just phone HMRC and ask for the Child Benefit deduction to be removed.  This will in turn probably means the underpayment element is removed as well.  Or reduced somewhat.

Had you filed your return any time up to 30 December then the same outcome would have occurred, albeit with a larger underpayment element in your current tax code.

After 30 December you would have lost the possibility of having the 2023-24 Self Assessment liability included in your 2025-26 tax code and would have to pay it direct to HMRC by 31 January 2025.

daveaspy

Thanks for the replies - I've just had a proper look through the SA Tax Calculation and the following tax code notice

SA Calc determined income tax due : £1414 - this includes the £2074 HICBC (and some other stuff knocked it down a bit)

Tax code notice - tax free amount reductions
Less Child Benefit Charge £4923 *note
Less adjustment for tax you owe (earlier year) £1965 (this was a mess up by my payroll dept)
Less adjustment for estimated tax you owe this year £832

*note: This is a deduction to recover the CB .... as we expect your income to exceed £60000. We will check this when we receive your tax return for year to 5 April 2025


So I think the CB charge £4923 is to repay the current years CB as I was over the 60k limit last year and they expect the same again this year so they might as well claw it back straight away - but I thought that limit changed this tax year to be 60-80k and I don't expect to be anywhere close to the top end of that bracket. Are you saying I can have that presumptive charge removed, and it will get calculated correctly next tax return to then be repaid through the following years tax code?

[Deleted User]

daveaspy said:

Thanks for the replies - I've just had a proper look through the SA Tax Calculation and the following tax code notice

SA Calc determined income tax due : £1414 - this includes the £2074 HICBC (and some other stuff knocked it down a bit)

Tax code notice - tax free amount reductions
Less Child Benefit Charge £4923 *note
Less adjustment for tax you owe (earlier year) £1965 (this was a mess up by my payroll dept)
Less adjustment for estimated tax you owe this year £832

*note: This is a deduction to recover the CB .... as we expect your income to exceed £60000. We will check this when we receive your tax return for year to 5 April 2025


So I think the CB charge £4923 is to repay the current years CB as I was over the 60k limit last year and they expect the same again this year so they might as well claw it back straight away - but I thought that limit changed this tax year to be 60-80k and I don't expect to be anywhere close to the top end of that bracket. Are you saying I can have that presumptive charge removed, and it will get calculated correctly next tax return to then be repaid through the following years tax code?

You can log into your tax account to check and change your estimated income. Your code for this tax year should change when you inform HMRC that you will not be liable to the charge and you will receive a refund through your payroll.

Contact them - best 8am. 

Overpayments are never paid back through PAYE. 

Dazed_and_C0nfused

daveaspy said:

Thanks for the replies - I've just had a proper look through the SA Tax Calculation and the following tax code notice

SA Calc determined income tax due : £1414 - this includes the £2074 HICBC (and some other stuff knocked it down a bit)

Tax code notice - tax free amount reductions
Less Child Benefit Charge £4923 *note
Less adjustment for tax you owe (earlier year) £1965 (this was a mess up by my payroll dept)
Less adjustment for estimated tax you owe this year £832

*note: This is a deduction to recover the CB .... as we expect your income to exceed £60000. We will check this when we receive your tax return for year to 5 April 2025


So I think the CB charge £4923 is to repay the current years CB as I was over the 60k limit last year and they expect the same again this year so they might as well claw it back straight away - but I thought that limit changed this tax year to be 60-80k and I don't expect to be anywhere close to the top end of that bracket. Are you saying I can have that presumptive charge removed, and it will get calculated correctly next tax return to then be repaid through the following years tax code?

The Child Benefit deduction will be based on the expected Child Benefit to be received in the current tax year and HMRC estimate of your adjusted net income for the current tax year.

This will predominantly be based on your earnings to either month 3 or 4 of the tax year (months ending 5 July or 5 August).

You yourself have effectively asked HMRC to make this adjustment but if that was an oversight or misunderstanding with how you completed the 2023-24 Self Assessment return you can ask for the Child Benefit to be removed.  And any HICBC will be determined as normal from your 2024-25 Self Assessment return without any extra tax credit from paying some as you go along through the year.

One consequence of this is the tax code deduction relating to this entry will also be revised (or removed) as it is no doubt largely based on the introduction of the Child Benefit entry.

Less adjustment for estimated tax you owe this year £832