Tax code 26/27, unpaid tax from previous year

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/81874573#Comment_81874573

No, the gross RAS contribution increases your basic rate band.

So you pay tax on the exact same income, but potentially at different rates.

The RAS contribution is deducted when calculating adjusted net income, used for HICBC, Married Couple's Allowance and tapering of the Personal Allowance.

RG2015

It has just occurred to me that HMRC may be thinking that I will breach the higher rate tax threshold this year. Hence generating the previous year’s underpayment in my 26/27 tax code.

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/81874604#Comment_81874604

You should be able to see their estimate for your taxable income this year in your online tax account?

RG2015

Going back to my original question. How do I find out how HMRC have determined that I will have underpaid tax this year?

There is no information anywhere. I cannot think of any other organisation that can in effect deduct payments without providing any justification.

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/81874867#Comment_81874867

How did you receive details of your latest code for 2025/26, snail mail or email?

That is precisely why you get your tax code for the forthcoming year around now, so any issues can be resolved before the code is used.

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/81874867#Comment_81874867

So are you happy that their estimates of your 2025/26 income are accurate, based on what's in your online account?

The wider point about the use of estimated figures in tax codes has been discussed on numerous occasions before - nobody claims it's 100% accurate but it's unrealistic to expect all taxation to be sorted out only after the end of the tax year, so it's not unreasonable to make some assumptions, especially when the finalised figures will resolve any underpayments or overpayments.

RG2015

I have not received any notification, either by Royal Mail or email. It just appeared in my online account.

I have inferred that the increase in untaxed interest of £500 can only be a change from £1,000 PTA to £500. It would be so easy for them to say that somewhere, rather than leaving me to guess the reason. At the moment they have overestimated my income and it will be well below the HRT threshold.

As regards the previous year underpayment, I have had to recalculate my figures. I can see that due to their error I will have underpaid by about £70. Hence by reducing my allowance by £342 they will collect this in 26/27.

Once again they have given me no details of their calculation, leaving me to work it out.

I understand that it is only ever going to be an estimate. However it is a bit shoddy. I used to work in finance and nobody would ever produce such a confusing report.

Their P800 format is much better and there is no excuse for not using the same approach just because the tax code is based on estimates.

eskbanker

Their P800 format is much better and there is no excuse for not using the same approach just because the tax code is based on estimates.

But the P800 is a definitive statement based on actual figures after the event - it's unrealistic to expect that sort of presentation for future figures that are based on estimates for income assumed to be received, when there are so many changes that can happen during the rest of the tax year?

I take your point that a coding change without clear derivation leaves unanswered questions though…

RG2015

@eskbanker,

But the P800 is a definitive statement based on actual figures after the event - it's unrealistic to expect that sort of presentation for future figures that are based on estimates for income assumed to be received, when there are so many changes that can happen during the rest of the tax year?

I have to disagree with you. I did budgets and forecasts. This was all based on assumptions, but we had to state our assumptions and provide full explanations.

I am not expecting a high degree of accuracy. Clearly that is impossible. But to simply increase the untaxed income due to an assumption of moving to a higher tax band (my inference) without saying anything is shoddy.

Equally, to reduce the allowance by £342 to collect £68 (again my inference) in unpaid tax without any explanation is just as poor.

And regarding the P800, their format was great, but even with the actual information, last year's untaxed interest was incorrect. I had to phone them and advise them their figure was wrong for 3 banks. Am I really meant to believe that RBS, Nationwide and First Direct had failed to inform them of my interest received 9 months after the tax year end?

badmemory

It will not be that the banks haven't notified them but that they haven't put them on your account. When I finally rang HMRC in December 24 my account did not even show my state pension for 23-24 & I had been taking it for over 10 years. The joys of simple assessment!