Help!! HMRC randomly dipped in and took 1/4 of my wages

molerat

What do you see when you 

log in to your on line tax account / Pay As You Earn (PAYE) / We changed your tax code on XX YYY 202? View your latest tax code change / Check how we worked your tax code

Which will show the workings for the previous and new tax codes

brutal_deluxe

Thanks, yes I'm probably not making much sense, my apologies and thanks for trying to work it out. 

The other ISA I opened was with Atom again of whom I was already a customer (with a login etc). It's a new account in as much as it has a different account number. So at worst I presume this would attract untaxed interest. 

So basically the only other thing that's changed is the new ZOPA account which is 20k so within ISA rules, so that's irrelevant.

The way I look at it, HMRC want potentially almost 1000 off me for what?? Literally nothing else has happened during the year.

Dazed_and_C0nfused

brutal_deluxe said:

Thanks, yes I'm probably not making much sense, my apologies and thanks for trying to work it out. 

The other ISA I opened was with Atom again of whom I was already a customer (with a login etc). It's a new account in as much as it has a different account number. So at worst I presume this would attract untaxed interest. 

So basically the only other thing that's changed is the new ZOPA account which is 20k so within ISA rules, so that's irrelevant.

The way I look at it, HMRC want potentially almost 1000 off me for what?? Literally nothing else has happened during the year.

Ok, that's (genuinely) helpful.

Before you get even more confused you need to understand things in a tax code can have knock on effects, so looking at yours the key thing is not the £10,658, it's the £4,207 figure.

That is almost certainly based on information banks and building societies have reported to HMRC for 2023-24.  Which HMRC will also use as the estimate for this tax year.

HMRC can give you details of the interest reported for 2023-24 (you cannot see it online, you will need to call them for the breakdown) but until you get that information you might want to carefully look through the details you have for all your accounts.  You need to focus on the interest that was paid, not the capital you moved about.

brutal_deluxe

Great! So I worked out the 4,207 very likely the total interest I earn from all 3 ISAs. However, I thought at least the interest from 20k was tax free?? They say I've underpaid 549 this year. So once that's paid off I go back to my old code?

Dazed_and_C0nfused

brutal_deluxe said:

Great! So I worked out the 4,207 very likely the total interest I earn from all 3 ISAs. However, I thought at least the interest from 20k was tax free?? They say I've underpaid 549 this year. So once that's paid off I go back to my old code?

You would be incredibly unlucky if a bank or building society had reported tax exempt ISA interest as taxable interest.  For that to happen for three accounts is bizarre.

I suspect it's more likely that you have not thoroughly checked what has happened with your ISA's.

You need to review all the details you have for each account and check if they were actually ISA's.  You might have opened them as ISA's but did you break the ISA rules and turn them into normal, non ISA, accounts.

The total interest is more likely to be £4,707 or £5,207 as well.  Check your Detailed tax estimate (or similar name), that shows the total interests figure HMRC are using.

HMRC aren't infallible, they might have made a mistake, but you really do need to be 100% certain what is going on before contacting them (if that's even necessary).  What we have learned from these type of threads is someone who doesn't fully understand what's happening then contacting a HMRC call centre is a recipe for total and utter confusion on all sides!

meggiemike

Atom bank don't offer ISAs as far as I can see, so any interest earned with them will be taxable.

Bobziz

meggiemike said:

Atom bank don't offer ISAs as far as I can see, so any interest earned with them will be taxable.

But they do offer an instant saver account 🤔

Dazed_and_C0nfused

Bobziz said:

meggiemike said:

Atom bank don't offer ISAs as far as I can see, so any interest earned with them will be taxable.

But they do offer an instant saver account 🤔

Interesting, that could explain a lot!

Maybe the op has made some incorrect assumptions about what an Instant saver account is 😳

brutal_deluxe

This just seems to get worse! So I checked my product which is entitled 'instant saver'. Is this different from an ISA? I thought ISA literally meant instant savings account? 

Anyway why is all this only happening now?? I've been an Atom customer for about 4 years with no sign of HMRC. Bottom line is absolutely nothing has changed with my circumstances this tax year, no changes in savings, if anything I'm getting less interest, yet all of a sudden I'm paying hundreds extra tax??!

Dazed_and_C0nfused

brutal_deluxe said:

This just seems to get worse! So I checked my product which is entitled 'instant saver'. Is this different from an ISA? I thought ISA literally meant instant savings account? 

Anyway why is all this only happening now?? I've been an Atom customer for about 4 years with no sign of HMRC. Bottom line is absolutely nothing has changed with my circumstances this tax year, no changes in savings, if anything I'm getting less interest, yet all of a sudden I'm paying hundreds extra tax??!

An "ISA" is a tax wrapper called an Individual Savings Account.  Interest from an ISA (where the ISA rules have been met) is exempt from tax.

An instant saver account is just a normal account where the interest is taxable.

You would need to know the taxable interest for each tax year to start to understand what happened in the previous tax years.