Tax Confusion

NebulaNova

Hi, I received a letter last month from HMRC stating I owed £250 in tax from 2024 - 2025. This does work out to be correct from interest I have earned on savings. I paid it straight away to avoid a tax code change.

However, HMRC have sent me another letter via a tax code change for the 2025 - 2026 tax year saying they are changing my tax code to have an X on the end and state they predict I will owe them around £150 and will collect this each month until April 2026.

Is this because they are guessing the interest I may earn 2025 - 2026? If so, can I stop that as I would prefer to pay it in a lump sum.

Thanks

QrizB

himonster said:

Is this because they are guessing the interest I may earn 2025 - 2026?

Yes.

himonster said:

If so, can I stop that as I would prefer to pay it in a lump sum.

No...

Dazed_and_C0nfused

himonster said:

Hi, I received a letter last month from HMRC stating I owed £250 in tax from 2024 - 2025. This does work out to be correct from interest I have earned on savings. I paid it straight away to avoid a tax code change.

However, HMRC have sent me another letter via a tax code change for the 2025 - 2026 tax year saying they are changing my tax code to have an X on the end and state they predict I will owe them around £150 and will collect this each month until April 2026.

Is this because they are guessing the interest I may earn 2025 - 2026? If so, can I stop that as I would prefer to pay it in a lump sum.

Thanks

Yes, it won't be to collect the £250 from 2024/25.

You could ask for a cumulative tax code to be issued for 2025/26 and then whatever the (estimated) amount you owe for this tax year will be deducted next time you are paid, all in one go.

NebulaNova

Dazed_and_C0nfused said:

himonster said:

Hi, I received a letter last month from HMRC stating I owed £250 in tax from 2024 - 2025. This does work out to be correct from interest I have earned on savings. I paid it straight away to avoid a tax code change.

However, HMRC have sent me another letter via a tax code change for the 2025 - 2026 tax year saying they are changing my tax code to have an X on the end and state they predict I will owe them around £150 and will collect this each month until April 2026.

Is this because they are guessing the interest I may earn 2025 - 2026? If so, can I stop that as I would prefer to pay it in a lump sum.

Thanks

Yes, it won't be to collect the £250 from 2024/25.

You could ask for a cumulative tax code to be issued for 2025/26 and then whatever the (estimated) amount you owe for this tax year will be deducted next time you are paid, all in one go.

They are overestimating though. My savings amount has changed so I work out I will only owe around £75, not £150. This is due to using an ISA back in April.

I'm a bit annoyed I'll be overpaying as well as them taking the amount they think it will be over 4 months. How and when you would I get an overpayment back?

Dazed_and_C0nfused

himonster said:

Dazed_and_C0nfused said:

himonster said:

Hi, I received a letter last month from HMRC stating I owed £250 in tax from 2024 - 2025. This does work out to be correct from interest I have earned on savings. I paid it straight away to avoid a tax code change.

However, HMRC have sent me another letter via a tax code change for the 2025 - 2026 tax year saying they are changing my tax code to have an X on the end and state they predict I will owe them around £150 and will collect this each month until April 2026.

Is this because they are guessing the interest I may earn 2025 - 2026? If so, can I stop that as I would prefer to pay it in a lump sum.

Thanks

Yes, it won't be to collect the £250 from 2024/25.

You could ask for a cumulative tax code to be issued for 2025/26 and then whatever the (estimated) amount you owe for this tax year will be deducted next time you are paid, all in one go.

They are overestimating though. My savings amount has changed so I work out I will only owe around £75, not £150. This is due to using an ISA back in April.

I'm a bit annoyed I'll be overpaying as well as them taking the amount they think it will be over 4 months. How and when you would I get an overpayment back?

You could just provide your own estimate (for each bank account, not a single total) and ask them to issue the new tax code on a cumulative basis.

That means you will have paid the £75 back next time you get paid (after the next new tax code is issued).

NebulaNova

Dazed_and_C0nfused said:

himonster said:

Dazed_and_C0nfused said:

himonster said:

Hi, I received a letter last month from HMRC stating I owed £250 in tax from 2024 - 2025. This does work out to be correct from interest I have earned on savings. I paid it straight away to avoid a tax code change.

However, HMRC have sent me another letter via a tax code change for the 2025 - 2026 tax year saying they are changing my tax code to have an X on the end and state they predict I will owe them around £150 and will collect this each month until April 2026.

Is this because they are guessing the interest I may earn 2025 - 2026? If so, can I stop that as I would prefer to pay it in a lump sum.

Thanks

Yes, it won't be to collect the £250 from 2024/25.

You could ask for a cumulative tax code to be issued for 2025/26 and then whatever the (estimated) amount you owe for this tax year will be deducted next time you are paid, all in one go.

They are overestimating though. My savings amount has changed so I work out I will only owe around £75, not £150. This is due to using an ISA back in April.

I'm a bit annoyed I'll be overpaying as well as them taking the amount they think it will be over 4 months. How and when you would I get an overpayment back?

You could just provide your own estimate (for each bank account, not a single total) and ask them to issue the new tax code on a cumulative basis.

That means you will have paid the £75 back next time you get paid (after the next new tax code is issued).

How would I do that? I spent 50 mins on hold to them earlier and gave up.

In April, they'll change the tax code again, predicting what I will earn over a year and it won't be correct, so again would I need to contact them to tell them?

Dazed_and_C0nfused

himonster said:

Dazed_and_C0nfused said:

himonster said:

Dazed_and_C0nfused said:

himonster said:

Hi, I received a letter last month from HMRC stating I owed £250 in tax from 2024 - 2025. This does work out to be correct from interest I have earned on savings. I paid it straight away to avoid a tax code change.

However, HMRC have sent me another letter via a tax code change for the 2025 - 2026 tax year saying they are changing my tax code to have an X on the end and state they predict I will owe them around £150 and will collect this each month until April 2026.

Is this because they are guessing the interest I may earn 2025 - 2026? If so, can I stop that as I would prefer to pay it in a lump sum.

Thanks

Yes, it won't be to collect the £250 from 2024/25.

You could ask for a cumulative tax code to be issued for 2025/26 and then whatever the (estimated) amount you owe for this tax year will be deducted next time you are paid, all in one go.

They are overestimating though. My savings amount has changed so I work out I will only owe around £75, not £150. This is due to using an ISA back in April.

I'm a bit annoyed I'll be overpaying as well as them taking the amount they think it will be over 4 months. How and when you would I get an overpayment back?

You could just provide your own estimate (for each bank account, not a single total) and ask them to issue the new tax code on a cumulative basis.

That means you will have paid the £75 back next time you get paid (after the next new tax code is issued).

How would I do that? I spent 50 mins on hold to them earlier and gave up.

In April, they'll change the tax code again, predicting what I will earn over a year and it won't be correct, so again would I need to contact them to tell them?

It would be a phone call yes.

But I think if you provide an update for this year (2025/26) then they would normally use that as well for 2026/27 (to start with anyway).

NebulaNova

Dazed_and_C0nfused said:

himonster said:

Dazed_and_C0nfused said:

himonster said:

Dazed_and_C0nfused said:

himonster said:

Hi, I received a letter last month from HMRC stating I owed £250 in tax from 2024 - 2025. This does work out to be correct from interest I have earned on savings. I paid it straight away to avoid a tax code change.

However, HMRC have sent me another letter via a tax code change for the 2025 - 2026 tax year saying they are changing my tax code to have an X on the end and state they predict I will owe them around £150 and will collect this each month until April 2026.

Is this because they are guessing the interest I may earn 2025 - 2026? If so, can I stop that as I would prefer to pay it in a lump sum.

Thanks

Yes, it won't be to collect the £250 from 2024/25.

You could ask for a cumulative tax code to be issued for 2025/26 and then whatever the (estimated) amount you owe for this tax year will be deducted next time you are paid, all in one go.

They are overestimating though. My savings amount has changed so I work out I will only owe around £75, not £150. This is due to using an ISA back in April.

I'm a bit annoyed I'll be overpaying as well as them taking the amount they think it will be over 4 months. How and when you would I get an overpayment back?

You could just provide your own estimate (for each bank account, not a single total) and ask them to issue the new tax code on a cumulative basis.

That means you will have paid the £75 back next time you get paid (after the next new tax code is issued).

How would I do that? I spent 50 mins on hold to them earlier and gave up.

In April, they'll change the tax code again, predicting what I will earn over a year and it won't be correct, so again would I need to contact them to tell them?

It would be a phone call yes.

But I think if you provide an update for this year (2025/26) then they would normally use that as well for 2026/27 (to start with anyway).

Thanks and would I then contact them again to explain my estimate?

Albermarle

You can change your estimated interest in your online personal tax account. Much quicker than hanging on the phone.

NebulaNova

Albermarle said:

You can change your estimated interest in your online personal tax account. Much quicker than hanging on the phone.

Can you? How do you do that please?

NebulaNova

Got through after an hour and 10 minutes, told them my estimated which was £1200 and then got cut off!
Looked in the app and they changed my tax code and there's a figure of £200, and not £1200... is that right?