Tax Return Question

[matt666]

I'm currently filling out my tax return (joy). I have a question on the underpaid tax section.

It says my notice of coding includes an adjustment for tax underpaid which is £441. This is OK and corresponds with the notice of coding I got sent. The next section has a space where I can fill out -

"Outstanding debt included in your tax code for 2013-14. Please enter '0' if there is nothing shown or you did not have a PAYE code."

So what do I put here, 441? If I put 441 and get to the end it says I owe £482 tax. If I put 0 it says I owe £41. Why has it added the £441 to the amount I owe if it's already been collected through my tax code over the year?

To be honest, I've always had an underpayment every year and I've always put 0 in this box. Have I done it wrong all these years?

[sumo69]

Do not enter it twice - if the system shows it was collecting £441 in 13/14 already then you are fine.

David

[Eric Mc]

Was the £441 adjustment shown in your 2013/14 tax code or is it included in your 2014/15 tax code?

Do you know what specific tax year the £441 relates to i.e. what tax year did you underpay the £441?

[matt666]

Thanks. The adjustment is in the 2013-14 code. I'm not sure what year the underpayment relates to, I'm presuming 12-13. My tax affairs should be straightforward, I'm PAYE, the only reason I do one is to claim mileage and a minute amount of working from home costs, plus adding in private healthcare which is paid for by my employer. It just seems simpler to do a self assessment online. Every year there is an underpayment and I'm not sure how they work it out.

Just checked my latest payslips and my code has gone down to 809L, I presume that's a precaution until I file my return?

[Eric Mc]

matt666 said:

Thanks.

Just checked my latest payslips and my code has gone down to 809L, I presume that's a precaution until I file my return?

Check why your 2014/15 code is 809L. The standard code for 2014/15 is 1000L. 809L indicates that perhaps they are collecting a tax underpayment in 2014/15 as well. A code of 809L indicates tax allowances of £8,090 - which shows a reduction in allowances of £1,910 from £10,000.
Do you receive any taxable benefits from your employer?

If you are a basic rate taxpayer, that could be because they are trying to collect a tax underpayment of £382.
If you are a higher rate taxpayer, that could be because they are trying to collect a tax underpayment of £764.

Have you received a detailed notice of coding for 2014/15 from HMRC? If not, you should contact them and ask them to send one out to you. I would refrain from submitting your 2013/14 tax return until you know for sure what they are doing with your 2014/15 coding.

Never assume that just because you mainly pay tax through the PAYE system that -

a) your tax affairs are straightforward

b) you are paying the correct tax under PAYE

[sumo69]

matt666 said:

Thanks. The adjustment is in the 2013-14 code. I'm not sure what year the underpayment relates to, I'm presuming 12-13. My tax affairs should be straightforward, I'm PAYE, the only reason I do one is to claim mileage and a minute amount of working from home costs, plus adding in private healthcare which is paid for by my employer. It just seems simpler to do a self assessment online. Every year there is an underpayment and I'm not sure how they work it out.

Just checked my latest payslips and my code has gone down to 809L, I presume that's a precaution until I file my return?

Underpayments collected via a tax code in 13/14 are those for tax year 11/12.

The small liabilities held over are likely to be as a result of the private healthcare premium increasing - the tax code will be based on the previous years premiums in most cases.

Re this years tax code - how much is the deduction for private health? I reckon that will account for most if not all the difference.

As Eric says, even PAYE cases can get too complicated for the layman.

David

[Eric Mc]

I often some of the most complex messes are those related to PAYE and Tax Codes.

[matt666]

Yes, this is really too complicated for me. It's made worse by the fact that a couple of things have changed over the past four or so years, I've gone from having a petrol card and claiming tax relief on mileage, to paying for my own fuel, having a mileage rate from the company and claiming the difference back in tax relief. I've also changed my pension from one where you claimed higher rate tax back to one that takes the contribution out before tax is applied.

I think I need to run these past an expert to make sure they're right.

[Sheepshanks]

sumo69 said:

Underpayments collected via a tax code in 13/14 are those for tax year 11/12.

I always find this part confusing - there's a "missing" year in the middle, ie 12/13 in the example above, so you're flipping backwards and forwards across 3 tax years.

The OP may well find a small underpayment each year as his private medical cost increases.

Re the boxes - wouldn't it sort itself out in future years even if you put the wrong info in?

[sumo69]

Sheepshanks said:

I always find this part confusing - there's a "missing" year in the middle, ie 12/13 in the example above, so you're flipping backwards and forwards across 3 tax years.

Re the boxes - wouldn't it sort itself out in future years even if you put the wrong info in?

The 11/12 return isn't due in until 10 months of the 12/13 tax year are over, so leaving 2 months to process, issue and employer implement a revised code which may be for a significant (up to £3k) underpayment may leave to negative pay, hence it takes effect from the start of 13/14.

The point is that this is a self-assessment: if HMRC don't spot his error when processing the TR this would result in an extra payment that wasn't due and would not be recoverable after 4 years have passed.

David