Expected that I’ve underpaid tax for 24/25

Bartoni79

Hi all,

it looks like I’ve underpaid my tax as a PAYE for 24/25. My income is likely to be 80k against tax of 15k (21%) by the end if this year.  I’m not sure why but my employer changed my tax code and doing my calls looks like I need to pay more tax. I probably owe about 6k. Is there a way to offset that 6k by contributing to a pension before the end of this tax year? Or are there any other ways to reduce tax that I can action before 5 April?

thanks 

Ayr_Rage

Employers do not change tax codes, they just apply the code supplied and issued by HMRC.

Have you checked you online gov.uk account and checked your earnings and other income figures?

Dazed_and_C0nfused

Bartoni79 said:

Hi all,

it looks like I’ve underpaid my tax as a PAYE for 24/25. My income is likely to be 80k against tax of 15k (21%) by the end if this year.  I’m not sure why but my employer changed my tax code and doing my calls looks like I need to pay more tax. I probably owe about 6k. Is there a way to offset that 6k by contributing to a pension before the end of this tax year? Or are there any other ways to reduce tax that I can action before 5 April?

thanks 

Pension contributions are likely to help but with the limited info supplied it's not really clear what has happened.

Are you Scottish resident for tax purposes?

Is the £80k earnings that will be on your P60?

Where have you got the £6k figure from?

A bit more detail would help.  A lot.

Bartoni79

Dazed_and_C0nfused said:

Bartoni79 said:

Hi all,

it looks like I’ve underpaid my tax as a PAYE for 24/25. My income is likely to be 80k against tax of 15k (21%) by the end if this year.  I’m not sure why but my employer changed my tax code and doing my calls looks like I need to pay more tax. I probably owe about 6k. Is there a way to offset that 6k by contributing to a pension before the end of this tax year? Or are there any other ways to reduce tax that I can action before 5 April?

thanks 

Pension contributions are likely to help but with the limited info supplied it's not really clear what has happened.

Are you Scottish resident for tax purposes?

Is the £80k earnings that will be on your P60?

Where have you got the £6k figure from?

A bit more detail would help.  A lot.

To answer…I’ve taken the taxable earnings figure on my last payslip (Feb; Month 11) and added another month to estimate my taxable pay at 80k. Similarly I’ve used the same method to estimate the tax I’m likely to pay for the end of this financial year. I’m in England. I’ve got to the 6k owing figure by putting my taxable income into the gov.uk calculator which has estimated the tax based on my taxable earnings. This has shown the difference of 6k vs what I expect to pay in tax.
I estimate to contribute 35k into my pension taken at source. 

Thanks 

Dazed_and_C0nfused

Bartoni79 said:

Dazed_and_C0nfused said:

Bartoni79 said:

Hi all,

it looks like I’ve underpaid my tax as a PAYE for 24/25. My income is likely to be 80k against tax of 15k (21%) by the end if this year.  I’m not sure why but my employer changed my tax code and doing my calls looks like I need to pay more tax. I probably owe about 6k. Is there a way to offset that 6k by contributing to a pension before the end of this tax year? Or are there any other ways to reduce tax that I can action before 5 April?

thanks 

Pension contributions are likely to help but with the limited info supplied it's not really clear what has happened.

Are you Scottish resident for tax purposes?

Is the £80k earnings that will be on your P60?

Where have you got the £6k figure from?

A bit more detail would help.  A lot.

To answer…I’ve taken the taxable earnings figure on my last payslip (Feb; Month 11) and added another month to estimate my taxable pay at 80k. Similarly I’ve used the same method to estimate the tax I’m likely to pay for the end of this financial year. I’m in England. I’ve got to the 6k owing figure by putting my taxable income into the gov.uk calculator which has estimated the tax based on my taxable earnings. This has shown the difference of 6k vs what I expect to pay in tax.
I estimate to contribute 35k into my pension taken at source. 

Thanks 

Not sure how the pension contribution is working. 

Do you mean you really earn £115k and your P60 will show £80k because of the pension contributions?

Or do you earn £80k and make "relief at source" pension contributions?  If so is the £35k before they pension company adds basic rate relief or inclusive of the basic rate relief?

What tax code is being used?

Bartoni79

Dazed_and_C0nfused said:

Bartoni79 said:

Dazed_and_C0nfused said:

Bartoni79 said:

Hi all,

it looks like I’ve underpaid my tax as a PAYE for 24/25. My income is likely to be 80k against tax of 15k (21%) by the end if this year.  I’m not sure why but my employer changed my tax code and doing my calls looks like I need to pay more tax. I probably owe about 6k. Is there a way to offset that 6k by contributing to a pension before the end of this tax year? Or are there any other ways to reduce tax that I can action before 5 April?

thanks 

Pension contributions are likely to help but with the limited info supplied it's not really clear what has happened.

Are you Scottish resident for tax purposes?

Is the £80k earnings that will be on your P60?

Where have you got the £6k figure from?

A bit more detail would help.  A lot.

To answer…I’ve taken the taxable earnings figure on my last payslip (Feb; Month 11) and added another month to estimate my taxable pay at 80k. Similarly I’ve used the same method to estimate the tax I’m likely to pay for the end of this financial year. I’m in England. I’ve got to the 6k owing figure by putting my taxable income into the gov.uk calculator which has estimated the tax based on my taxable earnings. This has shown the difference of 6k vs what I expect to pay in tax.
I estimate to contribute 35k into my pension taken at source. 

Thanks 

Not sure how the pension contribution is working. 

Do you mean you really earn £115k and your P60 will show £80k because of the pension contributions?

Or do you earn £80k and make "relief at source" pension contributions?  If so is the £35k before they pension company adds basic rate relief or inclusive of the basic rate relief?

What tax code is being used?

Yes it’s the former. The tax code is 2665T. This has been decided by my employer. I spoke to HMRC as to why I had this code and they stated it is because my employer changed it. The 35k pension is after tax relief is added. 

Dazed_and_C0nfused

So just to be clear, are you definitely making a gross relief at source contribution of £43,750.  £35,000 that you have paid plus £8,750 the pension company has added in basic rate relief?

You said the former, which is the exact opposite of a relief at source contribution.

HMRC have seemingly allowed some provisional tax relief relating to this pension contribution, hence the fairly high tax code of 2665T.  What is unusual is the T suffix.  Have you checked your Personal Tax Account to see the breakdown of this code?

Employers do not just randomly change tax codes.  They should only ever use one of these sources for tax codes,
1.  A P45 you gave them
2.  A new starter declaration you complete and give them
3.  A notification from HMRC

This seems to sit squarely in option 3.

When you calculated the £6k owed figure did you factor in your increased basic rate band???

Bartoni79

Very strange. HMRC had no knowledge of why my tax code was changed and said it was my employer that chahged it. As such they couldn’t tell me any more and told me to ask my employer. Unhelpfully I did try and find out but every time I submit a HR query it gets deleted from the internal queuing system.
Is Personal tax code through the HMRC website?
The 6k difference was determined by me extrapolating what I was likely to pay for the full year in tax, based on 11 months of what I had paid already vs the HMRC website calculator. 

The 35k is my contribution plus the company’s 3%. As it’s a pre tax contribution, my tax is lowered. Ie if I put 3k into my pension per month there’s a calculator showing that I this should reduce my tax by 1.5k. This 3k is directly transferred into the pension company.

penners324

Get the hmrc app

Bartoni79

Ok, adding to confusion.,,the letter from HMRC a year ago says my tax code is 1257L whereas my payslip says it’s. 2664T.