Tax return and unpaid tax via next year's tax code
Discussion
As you were!!!
Found it....it IS £2000, which obviously explains why I've got a "PAY THIS IMMEDIATELY LETTER" from them for £1500 or so.
Which incidentally is dated 12th February, which arrived 8th March!!!
Phoned 5 times today, up to 15 minutes on hold and got disconnected each time.
C
s!!!
HMRC says......
Paying back your underpayment
Underpayments of less than £2,000
HMRC normally gives you a new tax code and asks you to pay back the tax owed over one year. For example, if you didn't pay enough tax in the tax year 2009-10, you'll pay back the amount you owe in the tax year 2010-11, which starts on 6 April 2011. However, if you'd prefer to make a lump sum payment contact HMRC using the telephone number or address on your P800 Tax Calculation and ask for a paying-in slip. Once you've made the payment HMRC takes the underpayment out of your tax code.
If you complete a Self Assessment tax return HMRC automatically collects underpayments of less than £2,000 through your tax code unless you've asked them not to on your tax return. If you ask HMRC not to they put the amount owed back in your Self Assessment account or ask you to pay it as a lump sum.
Found it....it IS £2000, which obviously explains why I've got a "PAY THIS IMMEDIATELY LETTER" from them for £1500 or so.
Which incidentally is dated 12th February, which arrived 8th March!!!
Phoned 5 times today, up to 15 minutes on hold and got disconnected each time.
C
s!!!HMRC says......
Paying back your underpayment
Underpayments of less than £2,000
HMRC normally gives you a new tax code and asks you to pay back the tax owed over one year. For example, if you didn't pay enough tax in the tax year 2009-10, you'll pay back the amount you owe in the tax year 2010-11, which starts on 6 April 2011. However, if you'd prefer to make a lump sum payment contact HMRC using the telephone number or address on your P800 Tax Calculation and ask for a paying-in slip. Once you've made the payment HMRC takes the underpayment out of your tax code.
If you complete a Self Assessment tax return HMRC automatically collects underpayments of less than £2,000 through your tax code unless you've asked them not to on your tax return. If you ask HMRC not to they put the amount owed back in your Self Assessment account or ask you to pay it as a lump sum.
Regarding those who comple Self Assessment tax returns, for the last few years, the default assumption is that the taxpayer is going to physically pay underpaid tax rather than have the tax code automatically adjusted. If you want the tax collected through a code adjustment, you must tick a box on the return confirming this is what you want them to do. If you do not tick the box, they will ask you to pay it directly.
Thanks Eric - I'm pretty sure (99.99999%, as why wouldn't I?) I did tick the box - however, when I look at the PDF I downloaded and saved, it doesn't seem to have that box on it.....????
EDITED TO ADD - looking at the TR4 form again - it now turns out that you DON'T need to tick the box if you want the unpaid tax collected via your tax return.....see detailed post below with an extract of the form from page 5/16.
I KNEW I'd taken whatever option it was to have the money collected via the tax code though.
EDITED TO ADD - looking at the TR4 form again - it now turns out that you DON'T need to tick the box if you want the unpaid tax collected via your tax return.....see detailed post below with an extract of the form from page 5/16.
I KNEW I'd taken whatever option it was to have the money collected via the tax code though.
Edited by bleesh on Thursday 10th March 12:50
Self assessment Eric, as I have rental income :-)
I've investigated the return document again, and of course, although you get to the bit about unpaid tax at the END of the process when filling it in on-line, in the actual document, it's at the start - so I hadn't actually looked there!!!
On page 5/16 on the Tax Return document (TR4) in the section for "If you have not paid enough tax" it says, for box 2
"If you owe tax for 2009–10 and have a PAYE tax code, we
will try to collect the tax due (if less than £2,000) through
your tax code for 2011–12, unless you put ‘X’ in the box"
There is no X in the box.
I owe £1409.50.
So I read that as the £1409.50 "should" be collected via my 2011/2012 tax code.
I shall write to HMRC as I've been on the phone again this morning not getting an answer.
EDITED TO ADD - the wording on the form seems at odds with your thoughts Eric, as this reads that you need to put an X in the box if you want to pay the money now, otherwise it happens via a tax code adjustment.
Maybe the form's been changed but the "wonderful" IT system hasn't......??
Steve
I've investigated the return document again, and of course, although you get to the bit about unpaid tax at the END of the process when filling it in on-line, in the actual document, it's at the start - so I hadn't actually looked there!!!
On page 5/16 on the Tax Return document (TR4) in the section for "If you have not paid enough tax" it says, for box 2
"If you owe tax for 2009–10 and have a PAYE tax code, we
will try to collect the tax due (if less than £2,000) through
your tax code for 2011–12, unless you put ‘X’ in the box"
There is no X in the box.
I owe £1409.50.
So I read that as the £1409.50 "should" be collected via my 2011/2012 tax code.
I shall write to HMRC as I've been on the phone again this morning not getting an answer.
EDITED TO ADD - the wording on the form seems at odds with your thoughts Eric, as this reads that you need to put an X in the box if you want to pay the money now, otherwise it happens via a tax code adjustment.
Maybe the form's been changed but the "wonderful" IT system hasn't......??
Steve
Edited by bleesh on Thursday 10th March 12:47
ORIGINALLY, when self assessment started,, HMRC would automatically take tax through PAYE Codes if the tax due was under £500. It was up to the taxpayer to tick a box on the return to STOP HMRC from doing this.
About four years ago, the tax due threshold was raised from £500 to £2,000.
Collecting a sum of that amount can have a massive impact on a person's tax code and many taxpayers DON'T want their tax codes so severely mauled by adjustments trying to collect up to £2,000.
The first year the new threshold was in place, the forms remained unchanged so taxpayers werre still being asked to tick the box if they DIDN'T want HMRC to amend their codings. I had quite a few clients who were shocked to find their PAYE codings drastically reduced.
There were many complaints to HMRC so the following year, they amended the tax return to make it an "opt in" selection. rather than an "opt out".
It looks like they have now gone back to the original selection system.
I ALWAYS ensure that my clients do not have tax collected through their code UNLESS THEY INSTRUCT ME OTHERWISE.
About four years ago, the tax due threshold was raised from £500 to £2,000.
Collecting a sum of that amount can have a massive impact on a person's tax code and many taxpayers DON'T want their tax codes so severely mauled by adjustments trying to collect up to £2,000.
The first year the new threshold was in place, the forms remained unchanged so taxpayers werre still being asked to tick the box if they DIDN'T want HMRC to amend their codings. I had quite a few clients who were shocked to find their PAYE codings drastically reduced.
There were many complaints to HMRC so the following year, they amended the tax return to make it an "opt in" selection. rather than an "opt out".
It looks like they have now gone back to the original selection system.
I ALWAYS ensure that my clients do not have tax collected through their code UNLESS THEY INSTRUCT ME OTHERWISE.
Thanks again Eric for taking the time to contribute to this one :-)
I've nearly completed my letter, so will do that and get it in the post tonight - given up on the phone calls again!!
I'm happy for the amount to be collected via the tax code so will point out, as politely as possible, HMRC's error, advising them to collect via the tax code as indicated - and see what they say.
Anyway they're stuffed, seeing as though I told them to collect via the tax code, any pot of money with which I could have paid this sum, has been "otherwise invested" as I didn't need it - or so I thought.
It's so black and white, what could possibly go wrong with this approach, eh??
Steve
I've nearly completed my letter, so will do that and get it in the post tonight - given up on the phone calls again!!
I'm happy for the amount to be collected via the tax code so will point out, as politely as possible, HMRC's error, advising them to collect via the tax code as indicated - and see what they say.
Anyway they're stuffed, seeing as though I told them to collect via the tax code, any pot of money with which I could have paid this sum, has been "otherwise invested" as I didn't need it - or so I thought.
It's so black and white, what could possibly go wrong with this approach, eh??
Steve
Eric Mc said:
Regarding those who comple Self Assessment tax returns, for the last few years, the default assumption is that the taxpayer is going to physically pay underpaid tax rather than have the tax code automatically adjusted. If you want the tax collected through a code adjustment, you must tick a box on the return confirming this is what you want them to do. If you do not tick the box, they will ask you to pay it directly.
Ahh - thanks for that - explains why I got a a bill rather than a tax code adjustment!bleesh said:
EDITED TO ADD - looking at the TR4 form again - it now turns out that you DON'T need to tick the box if you want the unpaid tax collected via your tax return.....see detailed post below with an extract of the form from page 5/16.
I KNEW I'd taken whatever option it was to have the money collected via the tax code though.
Fulham - see my note on this - it seems the wording on the form has changed - but the mentality at the other end HASN'T changed!!I KNEW I'd taken whatever option it was to have the money collected via the tax code though.
Edited by bleesh on Thursday 10th March 12:50
So now you have to tick the box if you WANT TO PAY - and you leave it empty if you want it collected by your tax code.
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