Confused About HMRC Underpayment After Multiple Self Assessments — Advice Needed

garichd

I need some advice regarding Self Assessment.

I had never previously needed to complete a Self Assessment return. However, in 2021 I began receiving private medical insurance as a benefit from my employer. HMRC subsequently changed my tax code in 2022 and also collected additional tax for a previous year through my code.

In 2022, I also started receiving rental income from a lodger that exceeded the Rent a Room tax-free allowance, and I informed HMRC. At that point, HMRC advised me to begin completing Self Assessment returns. Since then, I have filed three returns: 2022–23, 2023–24, and 2024–25.

Despite completing these returns, the issue of tax code adjustments and “tax owed from previous years” has continued. One possible reason is changes to my medical insurance benefit—for example, HMRC may initially have held outdated figures, and I later moved from a single policy to a family policy. Because I now complete Self Assessment and report the medical benefit each year using the P11D figures, I assumed that any tax code adjustments would ultimately be reconciled through my annual return, with any remaining balance settled at year-end.

When completing my 2024–25 return, HMRC informed me that their records showed I owed £152 from previous years and that a tax code change notice had been issued. I disputed this on the basis that I had submitted Self Assessment returns for the relevant years and paid the tax due. After filing my return, I paid my full 2024–25 liability before 31 January 2026.

I have now received a letter from HMRC stating that, according to their records, I still owe £152 and that if I disagree I must notify them in writing within 30 days.

Could anyone advise on the best way to deal with this situation, and how I should challenge or reconcile the outstanding amount with HMRC?

eskbanker

How, if at all, has the balance of your self-assessment account reflected the alleged underpayment? In other words, when you paid your "full 2024–25 liability before 31 January 2026", was this simply the value on the bottom line of your 2024/25 calculation or the actual outstanding balance shown on your SA account?

poseidon1

As you say, you are assuming the additional tax relates to P11d benefits in kind which you self assessed in the relevant years.

However would it not be best to get HMRC to actually specify what the underpayment relates to so you can then properly reconcile the source to what you have previously declared?

If you appealed the underpayment not knowing to what it relates, and then later ascertain you had over looked ( for example) some bank interest received for the year, HMRC having picked it up via the BBSI system will have legitimately amended your calculations from their perspective.

If you go into your self assessment account ( easy enough on the HMRC app via the Annual Tax Summary link) , you should at least be able to pinpoint which tax year your self assessment numbers diverge from their calculations, and hopefully drill down from there.

sheramber

You need to establish which year/s the underpayment refers to.

You cannot assume which year it is or what caused it

artifin123

So, it's not uncommon for things to get a bit mixed up between your PAYE and Self Assessment records, especially when you've got benefits in kind. Even if you're sure you've paid everything, a small amount like that £152 might pop up if a benefit was just a guess in your tax code, or if there was some old PAYE debt that didn't get sorted out.

Your best bet is to write to HMRC. Just say you've filed all your returns and paid up, and ask them what year that balance is for and to sort things out. Loads of times, the amount just vanishes once they get everything lined up.

noitsnotme

https://forums.moneysavingexpert.com/discussion/comment/81878257#Comment_81878257

Is this reply AI generated?

artifin123

https://forums.moneysavingexpert.com/discussion/comment/81878297#Comment_81878297

No, its not

gt94sss2

When you fill in your tax return, do you tick the two options under "If you have not paid enough tax".

If you don't, I suggest you do going forward.