HMRC - can I claim interest charges against them?

Bruders333

I have been completing self assessment tax returns for the past 2 years due to my salary increasing to above the threshold for high income child benefit repayments.  In the previous year I repaid using the ability to do this through my tax code adjustment and I proposed to do this again this year as the £3k repayment was a considerable amount.  However, after arranging this with the self assessment department I decided, due to the affect on my monthly cash flow, that I would like to repay this in one go using funds from elsewhere.  Eventually, having been passed from self assessment to PAYE depts I was told I would be able to sort this, payment could be made and my tax code would be amended back to the basic coding and a letter with the payment slip was duly sent.  I sent a cheque which was cashed on the 21st March but my Tax code didn't get changed before my next salary payment.  I rang HMRC a couple of times, each time being passed between Self Assessment and PAYE departments, each of which told me it was the responsibility of the other department to sort this out!! After two more calls I was advised by the PAYE department that they had until the 31st May to apply this payment after wghich the tax code would be changed.  Again this date came and went and my code remained the same.  I called again last week and was told that it could now be fixed whilst on the call but the operator couldn't sort my code and advised I would now have to wait until the 30th June for the amount to be applied and the code changed.  All this time I am paying over £200 a month too much tax ( I know I will get this back eventually and its not a huge amount) but this is affecting my cashflow and I am having to use my overdraft and credit cards to cover this.

If payments owed to HMRC aren't paid on time interest is charged, I would love to know what happens the other way round where too much tax is paid and incorrect coding is so slow to be rectified!!

Hoenir

Bruders333 said:

  I sent a cheque which was cashed on the 21st March but my Tax code didn't get changed before my next salary payment. 

That was optimistic and stood no chance of ever happening.  Your payroll department probably had that month's payroll run prepped by the 21st March. 

Ayr_Rage

If you had the funds elsewhere, why didn't you just drip feed those into your monthly cash flow rather than paying it all to HMRC in one lump sum?

As you have now complicated the issue and fallen between two stools you'll just have to wait until they sort it out.

Exodi

Should this be in the vent board as I'm not sure there is a real question there, nor whether it's a genuine suggestion.

As @Hoenir says, incredibly optimistic to think a cheque cashed on the 21st would have an effect on the current salary run, we run our payroll and schedule the batch payment on our bank around the middle of the month, but it can be much earlier.

Dazed_and_C0nfused

Bruders333 said:

I have been completing self assessment tax returns for the past 2 years due to my salary increasing to above the threshold for high income child benefit repayments.  In the previous year I repaid using the ability to do this through my tax code adjustment and I proposed to do this again this year as the £3k repayment was a considerable amount.  However, after arranging this with the self assessment department I decided, due to the affect on my monthly cash flow, that I would like to repay this in one go using funds from elsewhere.  Eventually, having been passed from self assessment to PAYE depts I was told I would be able to sort this, payment could be made and my tax code would be amended back to the basic coding and a letter with the payment slip was duly sent.  I sent a cheque which was cashed on the 21st March but my Tax code didn't get changed before my next salary payment.  I rang HMRC a couple of times, each time being passed between Self Assessment and PAYE departments, each of which told me it was the responsibility of the other department to sort this out!! After two more calls I was advised by the PAYE department that they had until the 31st May to apply this payment after wghich the tax code would be changed.  Again this date came and went and my code remained the same.  I called again last week and was told that it could now be fixed whilst on the call but the operator couldn't sort my code and advised I would now have to wait until the 30th June for the amount to be applied and the code changed.  All this time I am paying over £200 a month too much tax ( I know I will get this back eventually and its not a huge amount) but this is affecting my cashflow and I am having to use my overdraft and credit cards to cover this.

If payments owed to HMRC aren't paid on time interest is charged, I would love to know what happens the other way round where too much tax is paid and incorrect coding is so slow to be rectified!!

You appear to have received very poor service overall and there really should be no reason why this couldn't have been resolved much sooner than now.

HMRC do pay interest in certain situations, just the same as they charge interest in some situations.

Tax overpaid in 2025-26 usually gets an interest payment if it is repair after 31 January 2027.

And for most people HMRC would only ever charge interest on tax owed for 2025-26 if it remained unpaid after 31 January 2027.

Annoying though it may be not getting this resolved in a sensible timeframe you won't be getting interest in your situation.