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

Dazed_and_C0nfused

masonic said:

eskbanker said:

Ah right, I get the point you're making now!  It represents non-PAYE income that HMRC believes you're receiving, but it may be wrong, and even if it's right, the taxation itself is driven by what's submitted (either via SA or BBSI, etc) rather than the non-coded income figure within the portal.

FWIW, I've had the same or very similar Non-coded income shown in my Personal Tax Account for over 5 years. At one point I did think about using the link below it to let HMRC know it could be removed, but as it has never had any consequence I just left it there.

I assume it gets reviewed at some point but maybe not.  Mine is from at least 5 years ago now but like you, never had any consequence so far and likely never will.

GrubbyGirl_2

You've had some very good tax info from others but seeing as you appear to only have £20k in an ISA which you opened in March 2024 and the rest in non ISA accounts, can I suggest as you haven't used your 2024/25 ISA allowance you open another ISA and put in £20k from your instant saving account before the end of March, then you can put another £20k in after the 6th April.  At least you'll get some of it back into ISAs and reduce your tax liability

Dazed_and_C0nfused

GrubbyGirl_2 said:

You've had some very good tax info from others but seeing as you appear to only have £20k in an ISA which you opened in March 2024 and the rest in non ISA accounts, can I suggest as you haven't used your 2024/25 ISA allowance you open another ISA and put in £20k from your instant saving account before the end of March, then you can put another £20k in after the 6th April.  At least you'll get some of it back into ISAs and reduce your tax liability

I don't think it will "reduce" it, but it will stop further taxable interest from adding to it 😉

GrubbyGirl_2

Dazed_and_C0nfused said:

GrubbyGirl_2 said:

You've had some very good tax info from others but seeing as you appear to only have £20k in an ISA which you opened in March 2024 and the rest in non ISA accounts, can I suggest as you haven't used your 2024/25 ISA allowance you open another ISA and put in £20k from your instant saving account before the end of March, then you can put another £20k in after the 6th April.  At least you'll get some of it back into ISAs and reduce your tax liability

I don't think it will "reduce" it, but it will stop further taxable interest from adding to it 😉

Indeed......my crappy wording!  

brutal_deluxe

Thanks guys, all this is way over my head but I'm learning albeit the hard way.

So answer me this. At the end of the day, whatever the taxable amount, it only relates to the INTEREST earned? 

I.e. my savings capital as a whole is safe, and my employment income is safe. 

The whole purpose of savings tax is to take a slice of the interest earned, not the capital itself. That's all I'm concerned about. 

Can I trust HMRC to have calculated all of this correctly?

Dazed_and_C0nfused

brutal_deluxe said:

Thanks guys, all this is way over my head but I'm learning albeit the hard way.

So answer me this. At the end of the day, whatever the taxable amount, it only relates to the INTEREST earned? 

I.e. my savings capital as a whole is safe, and my employment income is safe. 

The whole purpose of savings tax is to take a slice of the interest earned, not the capital itself. That's all I'm concerned about. 

Can I trust HMRC to have calculated all of this correctly?

Yes, it is the interest that gets taxed.  Interest from ISA's (the tax wrapper ones 😉) is exempt from tax so if you can get a good enough interest rate then ISA's (the tax wrapper ones) can help you avoid paying tax on your interest.

I doubt HMRC even know what the capital in each account is.  The banks and building societies have to report the interest.

In most cases HMRC will be correct but sometimes things are wrong.  They make a mistake, you might tell them something that is wrong or, occasionally banks have been known to report interest from Cash ISA's (the tax wrapper ones) as taxable interest.  But that is rare.

One thing you might find useful to remember is that what happens during the tax year is only ever provisional, once the tax year ends HMRC should pull together all the actual information, earnings reported by your employer, company benefits (if you have any) and taxable interest details and then review what you have paid with the tax actually due.  And if they owe you money or you owe them they will tell you.

NB.  If you have to compete a tax return for some reason then that is what finalises things, not a calculation HMRC create.

masonic

It relates to the interest that has been reported by the banks for previous tax years, and an estimate for the current tax year (as that information isn't known yet). The estimated part amounts to about £3.6k interest, which is less than you know you've received. Next year you should expect another adjustment, but there will be much less owed from the past.

I think it is always a good idea to check HMRC's figures, if you can be bothered to add up all the interest from the most recent 3 tax years. But I would be surprised if there was an error (if there is it is more likely to be an underestimate due to some bank not reporting to HMRC).

Bobziz

There's potentially another elephant in the room, which is why you have so much cash in savings accounts? What do you plan to use the money for ? 

Qyburn

eskbanker said:
 

Keep up!  While that point was made last night, subsequent posts clarified that the issue is that the OP misunderstood what an ISA actually is, and at least some of the accounts referred to as such are/were 'Instant Savings Accounts' rather than the genuine tax-free accounts usually denoted by the term....

Which also explains lack of transfer options.

Expotter

Dazed_and_C0nfused said:

brutal_deluxe said:

Bobziz said:

Worth checking your other 'ISA' accounts too just in case they are not actually what you think they are.

I'm assuming this includes my other savings accounts. Ok fine. I think all I needed to know was how much I can expect to have taken from my monthly pay for the immediate future. If I have underpaid (as they say) 549, and I have paid most of that this month, then the remainder is small and they won't take any more than they should? 

I just don't want to have to chase a rebate or anything . It's definitely not going to be more than the 549 they day I've underpaid?

Once this has been established, I can consider moving from these non ISA accounts that I appear to have misunderstood 

In your original post you said the new tax code was K283X.  The X isn't really part of the code, it signifies that the code should be used on a non cumulative basis, i.e. just on each pay day from now on without taking into account what you earned earlier in this tax year.

So if you earn exactly the same next month as you did when K283X was first used you can expect to pay the exact same amount of tax.  That will only change on 6 April, when a new tax code should be in place (details of what that new tax code is might not be available just yet).

This is correct, I also had my code changed to X (month 1) out of the blue and had extra tax deducted. I phoned HMRC ( over an hour on hold) and was told that because there is income from savings the system changes the code automatically to X. After explaining my income hadn't changed from the estimate, it was changed there and then back to a cumulative code. I'm hoping the extra tax will be refunded on my next pay.