Help with PAYE please? Freaking out.

Dazed_and_C0nfused

hogmanayhell said:

So if I say to HMRC I believe that I won’t receive any more overtime (quite likely) they may accept that and then fully assess in April at which point if I’m still due the tax then they will look to amend my code for 26/27? I don’t think I need to wait until my 25/26 tax return to start repaying? I’m always PAYE. I can then hopefully stretch this code recovery over 2 years?

I doubt they are even interested in that level of detail.  You can provide an updated estimate of your earnings online without giving any reason.

But it has to be realistic, if you enter £60k having already been paid £70k it won't wash.

If you continue in Self Assessment HMRC won't assess anything, you will be self assessing.

You might want to consider changing you how you answer the question near the end of the return about keeping your tax code up to date i.e. paying more under PAYE and less via Self Assessment.  That is almost certainly why things have been changed now, because of the choice you made with that question.

hogmanayhell

Right enough the HMRC did update my code the day after I did my self assessment and said I want the HIBC in my tax code.

So am I being stupid? I only earned £80k last year (24/25 which I just did self assessment for). So I pay the HIBC. If I’m in self assessment even for PAYE tax does that mean my underpayment for this year (25/26) is dealt with in Dec this year coming and due Jan 27? 

Dazed_and_C0nfused

hogmanayhell said:

Right enough the HMRC did update my code the day after I did my self assessment and said I want the HIBC in my tax code.

So am I being stupid? I only earned £80k last year (24/25 which I just did self assessment for). So I pay the HIBC. If I’m in self assessment even for PAYE tax does that mean my underpayment for this year (25/26) is dealt with in Dec this year coming and due Jan 27? 

It is dealt with in accordance with your choices.

Have you actually checked to see how you answered the question on your return?

If you decide that was a mistake (paying more during the year) then you can ask HMRC to undo your choice.  It doesn't apply to every single thing but HICBC is one where you can just pay it via Self Assessment.  But at the moment you seem to have told them not to do that (by how you completed your return).

hogmanayhell

I told them to take the HIBC from my PAYE from next tax year on my return 25/26. I’m happy doing that or paying via Self Assessment this month but preference would be via Tax.

Ive updated my Tax Estimate with HMRC on Gov Gateway to shown £98k this year (this is what I’ve earned to date plus my basic paying assuming no overtime with Jan to Mar. Hopefully this amends my tax code. If I do end up with overtime in these months I appreciate it creates a tax liability so the question is then, am I supposed to pay this via PAYE or does it get sorted in Dec when I do my online self assessment and note that I’ve underpaid therefore creating a big bill in Jan 2027 (this is achievable payment wise).

hogmanayhell

Also thank you so far everyone, I’m just anxious and having panic attacks which I know isn’t healthy and just feeling very silly for being stupid. Doesn’t help that I can’t speak to HMRC until tomorrow.

Dazed_and_C0nfused

hogmanayhell said:

I told them to take the HIBC from my PAYE from next tax year on my return 25/26. I’m happy doing that or paying via Self Assessment this month but preference would be via Tax.

Ive updated my Tax Estimate with HMRC on Gov Gateway to shown £98k this year (this is what I’ve earned to date plus my basic paying assuming no overtime with Jan to Mar. Hopefully this amends my tax code. If I do end up with overtime in these months I appreciate it creates a tax liability so the question is then, am I supposed to pay this via PAYE or does it get sorted in Dec when I do my online self assessment and note that I’ve underpaid therefore creating a big bill in Jan 2027 (this is achievable payment wise).

That doesn't make much sense to me sorry. 

If you are continuing to file Self Assessment returns then any additional liability due for 2025/26 will be finalised when you complete your 2025/26 return.

How you pay that liability depends on the amount, when you file the return and how you answer a different question on the return.  You will probably find paying it direct to HMRC the simplest to understand in the long term (payable 31 January 2027) but it could, in some situations, be collected via your 2027/28 tax code (as tax owed).

hogmanayhell

Sorry. I’ll try be clearer.

My return for 24/25 is done. I asked for the HIBC to be recovered from my tax this coming year 26/27.

I’ve updated my estimated tax in HMRC Gov Gateway for this year to under the £100k (which is entirely possibly as my overtime can erratic). This hopefully means the SK code will disappear and be replaced by S1257L again? 

I’m just anxious to know if HMRC will then just automatically try PAYE recovery next year for the actual income tax underpayment (separate to the HIbC) that was caused by my loss of personal allowance over 12 months or if it really is included in self assessment. 

hogmanayhell

Just wanted to jump on and say thank you for the guidance. HMRC allowed me to update my estimated income to below the £100k and adjusted my tax code so I’m not receiving a negative allowance these next few months (although I’m also not receiving a positive one). 

This should allow me to then push the underpaid tax (if any) to Jan 2027 which gives me plenty time to plan accordingly. For future I’ll make sure to make AVCs to stay below this limit.