Tax code dispute

cragside

Since I've been hovering around the 40% tax bracket the last year or two, I've started to incur tax on my savings interest (I am PAYE).

I disagree with my tax code for the current year and am hoping someone can help.

Summary:

- For 2023-24 tax year (when I was 1257L) they said I earned £1466 in interest, so minus the £500 allowance leaves £966 tp pay 40% on. Looking at my records that's close enough, so I paid the £390 tax bill in full last December as soon as they told me the figure. So far so good.

- Then in Jan just gone (which they said is when the banks send HMRC the interest figures even though the tax year isn't complete at that point) they said for tax year 2024-25, I owe £1466.  Obviously I haven't earned exactly the same amount of interest two years in a row, plus my records say it'll be more like £1100.

- They changed my tax code to 1160LX to account for this, so I rang HMRC (on hold for 45 mins!) and explained. He just said it's up to the banks what figures they send in, couldn't explain why it was the same 2 years in a row, put me on hold for a while then I got cut off.

- Unable to face another call like that I wrote an old fashioned letter to explain and dispute it.  (I also said I'd rather pay a lump sum for what I actually owe than have my pay reduced based on estimates.)

- Got a reply after a few weeks asking me to list all my accounts and the interest received. Great, getting somewhere I thought, but then I noticed they are asking about the 2025-26 tax year which hasn't even started yet!  Maybe a typo but "2025 to 2026" appears nine times in the letter.

Of course I'll reply with my 2024-25 figures, but does anyone know why they want "amount of interest received in 2025 to 2026" in case I've massively misunderstood something? (I see they have already given me an even worse tax code for 25-26, but I'm disputing the current tax year at the moment.)

And are snail mail and rubbish helpline my only two contact options?

Thanks!

TheSpectator

No - go into your Personal Tax Account (or set one up if you haven't already) and put your own estimates of interest.

It's normal practice for HMRC to carry forward the same figure to the following tax year and will resolve itself once the actual 24/25 figures are reported by the banks.

molerat

Mid 24-25 they receive the records from the banks for 23-24 and will issue a bill for that year.

Later on they use that figure as the updated estimate for the 24-25 tax year and adjust the code to collect tax on that amount

They will also use that amount to estimate your new 25-26 tax code.

Mid 25-26 ............... and so it goes on

If you don't agree with the 24-25 estimate go in to your on line tax account and correct it, it may get sorted before any end of month pay run.

You can't adjust 25-26 yet but you will be able to after 6 April if you don't agree.

The main problem here is that paying tax on interest has only become a big thing over the past couple of years and coupled with the freezing in tax allowances has had an effect on many that have not experienced it before.

cragside

TheSpectator said:

No - go into your Personal Tax Account (or set one up if you haven't already) and put your own estimates of interest.

It's normal practice for HMRC to carry forward the same figure to the following tax year and will resolve itself once the actual 24/25 figures are reported by the banks.

They said the new tax code came about in Jan after they received the 24-25 figures, which confuses me. 
Also, where do I enter my estimates of interest?  I've looked in my PTA and can't see it anywhere.

Dazed_and_C0nfused

cragside said:

TheSpectator said:

No - go into your Personal Tax Account (or set one up if you haven't already) and put your own estimates of interest.

It's normal practice for HMRC to carry forward the same figure to the following tax year and will resolve itself once the actual 24/25 figures are reported by the banks.

They said the new tax code came about in Jan after they received the 24-25 figures, which confuses me. 
Also, where do I enter my estimates of interest?  I've looked in my PTA and can't see it anywhere.

You have been talking to a trainee.  There are no 2024-25 figures.

HMRC use the previous year (2023-24) as an estimated for 2024-25.

Banks don't even have to report the 2024-25 figures to HMRC until the end of June 2025.

DRS1

cragside said:

TheSpectator said:

No - go into your Personal Tax Account (or set one up if you haven't already) and put your own estimates of interest.

It's normal practice for HMRC to carry forward the same figure to the following tax year and will resolve itself once the actual 24/25 figures are reported by the banks.

They said the new tax code came about in Jan after they received the 24-25 figures, which confuses me. 
Also, where do I enter my estimates of interest?  I've looked in my PTA and can't see it anywhere.

I gather you have to look for Add Investment Income.

cragside

DRS1 said:

cragside said:

TheSpectator said:

No - go into your Personal Tax Account (or set one up if you haven't already) and put your own estimates of interest.

It's normal practice for HMRC to carry forward the same figure to the following tax year and will resolve itself once the actual 24/25 figures are reported by the banks.

They said the new tax code came about in Jan after they received the 24-25 figures, which confuses me. 
Also, where do I enter my estimates of interest?  I've looked in my PTA and can't see it anywhere.

I gather you have to look for Add Investment Income.

I saw that but backed out of it as I thought savings were different to investments?

Dazed_and_C0nfused

cragside said:

DRS1 said:

cragside said:

TheSpectator said:

No - go into your Personal Tax Account (or set one up if you haven't already) and put your own estimates of interest.

It's normal practice for HMRC to carry forward the same figure to the following tax year and will resolve itself once the actual 24/25 figures are reported by the banks.

They said the new tax code came about in Jan after they received the 24-25 figures, which confuses me. 
Also, where do I enter my estimates of interest?  I've looked in my PTA and can't see it anywhere.

I gather you have to look for Add Investment Income.

I saw that but backed out of it as I thought savings were different to investments?

It's just not very well worded.  If you continue you will see untaxed interest as an option.

cragside

Found it. Thanks all - wish I'd asked in January!