Self assessment tax bill of 7k!!

Dazed_and_C0nfused

Elmroad82 said:

I believe my contract contains working from home. 

There was no change in code. It remained the same (2665T) for both 22-23 and 23-24. The oddity is that I owe tax payments to HMRC now in 23-24 when my taxable income in my p60 is 40k less..nothing else has changed  ie I don’t have any additional income streams..

But do you have the extra things HMRC provisionally included in your 2023-24 tax code 🤔

I suspect you may have taken your eye off the ball there as 2665T is an exceptionally high tax code.

Elmroad82

Hi, would you mind elaborating a bit more please? What does 2665T mean and what are the extra things are provisionally included?
With reference to taking my eye off the ball..how do I keep my eye on the ball and make sure this doesn’t happen again?
I assumed that as tax had been calculated correctly in 22-23 and the tax code hadn’t changed,  that with a reduction in income in 23-24 the tax would again be calculated correctly. Is there anything I could have done to foresee this? 

Dazed_and_C0nfused

Elmroad82 said:

Hi, would you mind elaborating a bit more please? What does 2665T mean and what are the extra things are provisionally included?
With reference to taking my eye off the ball..how do I keep my eye on the ball and make sure this doesn’t happen again?
I assumed that as tax had been calculated correctly in 22-23 and the tax code hadn’t changed,  that with a reduction in income in 23-24 the tax would again be calculated correctly. Is there anything I could have done to foresee this? 

There could literally be a million ways of arriving at tax code 2665T.  All it means is you have been provisionally given a tax code with tax code allowances in the range from 26650 to 26659.

Which is significantly more than most people benefit from.

Your tax return is what finalises things for the tax year so, if for example the 26650-9 included say estimated job expenses of 15000 based on your previous years return and you are not claiming a similar amount in 2023-24 then you can normally expect to pay a lot of extra tax back.  Simply because you paid less than was necessary during the tax year.

Key thing is check your personal tax account and make sure your tax code is as accurate as possible for each tax year (based on the situation for that particular tax year).

TheSpectator

I suspect your former accountant has been making dodgy expenses claims on your behalf if you have no idea what was claimed.....which should be based on what you told the accountant. 

Elmroad82

Hi,

I had the same expenses from the prior year which were pretty insignificant and also did a self assessment but was paid 40k less hence my confusion. When you say tax allowance of 26650 to 26659, do you mean that if I’m paid 100k, then I’m only taxed from earnings above 26650 ie on the remaining 73550? 

Finally, to get clarity on what’s happening, is it best to try and get an answer out of my account or the HMRC call centre?

DRS1

If you log on to your personal tax account won't you get a lot more detail on how your tax has been worked out - whether its seeing how the tax code is made up or looking at any self assessment returns you have submitted.  The self assessment bit usually has a page showing the detailed calculation of your tax.

saajan_12

Elmroad82 said:

Hi, would you mind elaborating a bit more please? What does 2665T mean and what are the extra things are provisionally included?
With reference to taking my eye off the ball..how do I keep my eye on the ball and make sure this doesn’t happen again?
I assumed that as tax had been calculated correctly in 22-23 and the tax code hadn’t changed,  that with a reduction in income in 23-24 the tax would again be calculated correctly. Is there anything I could have done to foresee this? 

Well most people have a 1257L tax code, meaning they have a tax free allowance of around 12,570 (the last digit is not accurate) due to the standard personal allowance. If you earn over 100k, your personal allowance should reduce so the number should go down. If you get other benefits or put money into your pension, etc etc then the number could change.

Yours at 2665T is double the standard allowance for some reason - we can't say why and whether those reasons still apply. Since you're earning over 100k, you should start losing some of the 12k allowance. So the difference in tax code could be quite large - essentially you haven't had tax deducted on 26k of income over the year, and now have to pay the tax on some of that (you may retain some allowance). 

What you could do next time is keep an eye on the tax code, and find out why its changed as soon as it does - if not valid, then asking HMRC to correct at the time could ensure the monthly tax deducted remains in line and you don't have a big difference (either way) at the end. BTW did you not notice the amount coming in your bank account changed even if the pay slip was too difficult to read?

Nomunnofun1

Elmroad82 said:

Hi,

I had the same expenses from the prior year which were pretty insignificant and also did a self assessment but was paid 40k less hence my confusion. When you say tax allowance of 26650 to 26659, do you mean that if I’m paid 100k, then I’m only taxed from earnings above 26650 ie on the remaining 73550? 

Finally, to get clarity on what’s happening, is it best to try and get an answer out of my account or the HMRC call centre?

You have around 14000 of additional allowances above the normal 12570. Are you, perhaps, a medical professional who claims substantial professional subscriptions? Can you outline what expenses you provide to your accountant?

DBdoobydoo

Nomunnofun1 said:

Elmroad82 said:

Hi,

I had the same expenses from the prior year which were pretty insignificant and also did a self assessment but was paid 40k less hence my confusion. When you say tax allowance of 26650 to 26659, do you mean that if I’m paid 100k, then I’m only taxed from earnings above 26650 ie on the remaining 73550? 

Finally, to get clarity on what’s happening, is it best to try and get an answer out of my account or the HMRC call centre?

You have around 14000 of additional allowances above the normal 12570. Are you, perhaps, a medical professional who claims substantial professional subscriptions? Can you outline what expenses you provide to your accountant?

For a doctor GMC+BMA+MDU & Royal College fees that can be claimed as expenses won't amount to more than about £2K at most.

Nomunnofun1

DBdoobydoo said:

Nomunnofun1 said:

Elmroad82 said:

Hi,

I had the same expenses from the prior year which were pretty insignificant and also did a self assessment but was paid 40k less hence my confusion. When you say tax allowance of 26650 to 26659, do you mean that if I’m paid 100k, then I’m only taxed from earnings above 26650 ie on the remaining 73550? 

Finally, to get clarity on what’s happening, is it best to try and get an answer out of my account or the HMRC call centre?

You have around 14000 of additional allowances above the normal 12570. Are you, perhaps, a medical professional who claims substantial professional subscriptions? Can you outline what expenses you provide to your accountant?

For a doctor GMC+BMA+MDU & Royal College fees that can be claimed as expenses won't amount to more than about £2K at most.

They would be for a salaried GP. Like you - I’m not getting anywhere near 14000 though!