HMRC tax bill for previous year or tax code change

lir7

Hello,

My retired dad has had a letter from HMRC saying he owes tax for the 24/25 year for updated bank interested as they estimated too low. It seems he has been charged for all joint interest not just 50% and I'm looking into the details of that. This letter says the tax owed needs to be paid as a lump sum.

Since then he's had a tax code issued for 26/27 and the tax on his taxed private pension has increase to nearly 50% of the monthly payment. I've only known HMRC to adjust tax codes for debts so is the latest letter correct and the amount is being reclaimed via his tax code? He's losing roughly £50 pm which equates to way more than what he owes if it continues through the whole of this tax year.

TIA

Dazed_and_C0nfused

The tax code will likely be using an estimate for the interest, based on the actual information submitted for 2024/25.

Is the letter a Simple Assessment (PA302)? If so that tax from 2024/25 is definitely not being collected via the tax code.

Remember if he gets the State Pension that will have increased this year but the Personal Allowance has remained the same so that will have added to the extra tax he is paying.

LITRG

Hi OP. We recently published an article on our website about incorrect bank interest figures on HMRC tax calculations, which you may find helpful - see

Check the savings interest figure included in your tax calculation – it’s not always correct. | Low Incomes Tax Reform Group

The article explains how to challenge the figures if you think they are incorrect. I hope this helps.