Tax office claim i owe them

spirit
spirit Posts: 2,886 Forumite
First Anniversary Combo Breaker Mortgage-free Glee!
Hello all

HMRC wrote to me before Christmas claiming I would owe them £1867.73 by the end of this tax year. It totally threw me since I am and have aways been employed on paye.

A phone call to them didn't tell me why or how come. The letter said they had changed tax code to l190x from 1150l, . I rang back to have it investigated as I can't afford for them to take that amount in one hit. Nor can I really afford for them to take it in monthly instalments from the new tax year, over the whole year, which is what they said they'd do instead.

Today's letter from them, but dated 6th feb? Says they've changed my tax code to 251L. So my personal allowance is £11850 less adjustment for tax owed from previous year. Total tax free amount £2512.

So my questions are. Is the £2512 the amount I can earn before tax is payable? Also, as I am a single person household with no other income, what can I do if the deductions leave me seriously short for a whole year?
Mortgage free as of 10/02/2015. Every brick and blade of grass belongs to meeeee. :j
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Comments

  • molerat
    molerat Posts: 31,853 Forumite
    Name Dropper Photogenic First Post First Anniversary
    edited 8 March 2018 at 8:54PM
    You will be able to earn 1/12th of £2512, £209, each month before you start paying tax. They will collect £155 of the owed tax off of you each month.

    You need to find out why you owe that amount ? Do you have a company car ?
  • If you can post details of the breakdown of this tax year's new tax code (referred to as l190x in your op) you will be more likely to get some help in sorting this out.

    If you haven't got the tax code letter anymore you should be able to see the breakdown tonight by looking at your Personal Tax Account on gov.uk.
  • spirit
    spirit Posts: 2,886 Forumite
    First Anniversary Combo Breaker Mortgage-free Glee!
    Hi. He's they said their prediction was that by the end of this tax year I'd owe £1867.73.

    No. I don't have a company car.

    I asked them if it was to do with a lump sum - from an old pension, that I took in May 2017. I paid emergency tax on that at the time. They said it couldn't have been because of that since it was long enough ago that they'd have noticed before Nov 2017.

    In fact the paperwork at the time of the lump sum payment said to do a claim for tax refund. Can't remember which form reference it is. It's in my file somewhere.
    Mortgage free as of 10/02/2015. Every brick and blade of grass belongs to meeeee. :j
  • The tax code notice is called a P2 Notice of Tax Coding.

    From the additional information you have posted it is quite possible you owe extra tax on the pension lump sum you received.

    Emergency tax code will mean you have received extra tax allowances you are probably not entitled to (this is normal for a first pension payment).

    If you can post the pension amount you were paid (gross taxable amount before tax plus the tax deducted along with your February (or March if already available) payslip details - taxable pay for the year to date and tax paid - then it might be possible to gauge how accurate the £1867 is.

    Did you get any professional advice about the tax consequences of taking the pension lump sum in the 2017:18 tax year?
  • spirit
    spirit Posts: 2,886 Forumite
    First Anniversary Combo Breaker Mortgage-free Glee!
    If you can post details of the breakdown of this tax year's new tax code (referred to as l190x in your op) you will be more likely to get some help in sorting this out.

    If you haven't got the tax code letter anymore you should be able to see the breakdown tonight by looking at your Personal Tax Account on gov.uk.

    Thanks for your reply. I'll put here all they've said.

    First letter on 29 Nov. Letter to advise of new tax code for 6 April 2017 do 5th April 18. Personal allowance £11500, less adjustment for estimated tax owed £13419.(note relating to this says they think I will owe £1867.73 to be paid by 5 April 2018. Next line says (name of employer) £1919 is added to this income tax code k190x replaces 1150L. Thanks totals your tax free amount £-1919. Estimated tax you owe this year £1867.73.

    Next letter dated 7 dec. Tax code notice for 6 Apr 017 to 5 apr 2018. Personal allowance £1150.(employer name) £1150 of this income is tax free tax code 1150L replaces K190x. (This is where they changed it back). This totals your tax free amount £11500. Estimated tax you owe this year £1867.73.

    Today's letter.Tax code letter for 6 apr 2018 to 5 apr 2019.
    Personal allowance £11850. Less adjustment for tax owed previous year £9338 total tax free amount t £2512.
    Total tax free Mount is used as follows
    (Employer name) £2512 of this income is tax free. Tax code 251L. This totals your tax free amount £2512. Note on the back says we. Told you that you owe £1867 from last year. Have included an adjustment to reduce my tax free allowance by £9338 so they can collect the £1867 by 5 apr 2019.

    I hope that was the info you needed?
    Mortgage free as of 10/02/2015. Every brick and blade of grass belongs to meeeee. :j
  • Given that the only entry (other than the Personal Allowance) in the original tax code informing you of the tax owed is an adjustment to collect the £1,867 then it is highly likely this is due to extra tax being owed on the pension payment you received.

    The next question is how accurate is the £1,867 and to try and work that out would involve knowing the pension information (taxable payment and tax deducted) and your taxable income and tax paid on your ongoing employment.
  • spirit
    spirit Posts: 2,886 Forumite
    First Anniversary Combo Breaker Mortgage-free Glee!
    The tax code notice is called a P2 Notice of Tax Coding.

    From the additional information you have posted it is quite possible you owe extra tax on the pension lump sum you received.

    Emergency tax code will mean you have received extra tax allowances you are probably not entitled to (this is normal for a first pension payment).

    If you can post the pension amount you were paid (gross taxable amount before tax plus the tax deducted along with your February (or March if already available) payslip details - taxable pay for the year to date and tax paid - then it might be possible to gauge how accurate the £1867 is.

    Did you get any professional advice about the tax consequences of taking the pension lump sum in the 2017:18 tax year?

    Ok got the letter from Capita. Amount payable tax free ££6140.79. Amount subject to tax £18422.38.

    It says that after 5 apr 2018 hmrc Will Check If Ive Paid The Right Amount Of Tax Or Not. It Says That The Tax deducted Will Be Emergency Code Week One -503L.

    However, If I Think Ive Paid Too Much Tax I Dont Have To Wait Til After 5 April 2018 And To Ask For Form P53a


    I did my own research before opting for the lump sum as was a relatively small amount.

    Thank you for your
    Help so far by the way.
    Mortgage free as of 10/02/2015. Every brick and blade of grass belongs to meeeee. :j
  • spirit
    spirit Posts: 2,886 Forumite
    First Anniversary Combo Breaker Mortgage-free Glee!
    Given that the only entry (other than the Personal Allowance) in the original tax code informing you of the tax owed is an adjustment to collect the £1,867 then it is highly likely this is due to extra tax being owed on the pension payment you received.

    The next question is how accurate is the £1,867 and to try and work that out would involve knowing the pension information (taxable payment and tax deducted) and your taxable income and tax paid on your ongoing employment.

    We have on line payslips. Will check that in the morning.
    Mortgage free as of 10/02/2015. Every brick and blade of grass belongs to meeeee. :j
  • spirit
    spirit Posts: 2,886 Forumite
    First Anniversary Combo Breaker Mortgage-free Glee!
    molerat wrote: »
    You will be able to earn 1/12th of £2512, £209, each month before you start paying tax. They will collect £155 of the owed tax off of you each month.

    You need to find out why you owe that amount ? Do you have a company car ?

    What can I do if the £155 leaves me a bit short each month?
    Mortgage free as of 10/02/2015. Every brick and blade of grass belongs to meeeee. :j
  • spirit
    spirit Posts: 2,886 Forumite
    First Anniversary Combo Breaker Mortgage-free Glee!
    If I end up owing them that, would I be better off paying it from that pension layout given its sitting in a cash isa at the moment, or leaving as is to come out of salary. Or just wait til my April salary goes in ( on 28th)?

    Sorry for so many questions and thank you.

    HMRC phone agents didn't seem to know what's what. They kept putting me on hold for ages whilst they asked someone else, but still didn't have any answers
    Mortgage free as of 10/02/2015. Every brick and blade of grass belongs to meeeee. :j
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