Savings & Tax Code

uksniper

I've recently been advised I underpaid tax by HMRC and have entered the 40% tax threshold due to interest on savings. HMRC have updated my tax code to collect expected interest moving forward.

My questions:

1) Does allowing the previous years of owed tax to be collected in my tax code (rather than making a back payment) increase the amount of income that will above the 40% threshold? (I'm thinking if I had paid it in the year it had been owed I'd still be in the 20% bracket)

2) Can HMRC force me to collect tax for interest in my tax code? Or can I just be billed for it and make the payment at the end of each tax year without self assessment?

Thank you in advance for your time

Dazed_and_C0nfused

uksniper said:

I've recently been advised I underpaid tax by HMRC and have entered the 40% tax threshold due to interest on savings. HMRC have updated my tax code to collect expected interest moving forward.

My questions:

1) Does allowing the previous years of owed tax to be collected in my tax code (rather than making a back payment) increase the amount of income that will above the 40% threshold? (I'm thinking if I had paid it in the year it had been owed I'd still be in the 20% bracket)

2) Can HMRC force me to collect tax for interest in my tax code? Or can I just be billed for it and make the payment at the end of each tax year without self assessment?

Thank you in advance for your time

1). Tax owed doesn't alter your tax bands at all.

2). No.  If you receive a P800 calculation and want to pay the tax owed direct to HMRC you can do.