Unpaid income tax query
Discussion
Back in July i changed jobs and shortly thereafter started getting messages from HMRC saying that i had underpaid income tax. The most recent message i received yesterday says i owe about £4,500 for the year 2024-2025.
I had been with a company from 2019 to August 2024 and up to that point all the tax was fine. Last August I moved to a small company that were financially incompetent which is no doubt how the tax got messed up. Then, like i say, i moved jobs again in July this year back to a large company so the taxes will be dealt with properly going forwards.
I've been on the PAYE system for 20 years and this is the first time I've had anything from HMRC saying that i'm more than about £20 out either way. TBH i find the various codes and whatnot entirely baffling and having spoken to the payroll bod in my current company and shown them the messages from HMRC, it seems that even those who work in the field don't find it clear. I think my tax code has changed 3 or 4 times since I joined my current employer including when i received the most recent message from HMRC. That change was from code K640X to code 964LX
Ultimately i don't see much point in challenging the money owed, I probably do owe it and am fortunate to be able to afford it. My question is, are the tax codes designed so that the £4,500 i owe be incrementally paid over over the remainder of the year either in full or in part through the PAYE system? Or will that £4,500 just sit there until i pay it off via bank transfer? If it will be paid off in part or in full by the end of the year it would make sense to wait and see. But if it's not going to change i may as well just pay it off.
I had been with a company from 2019 to August 2024 and up to that point all the tax was fine. Last August I moved to a small company that were financially incompetent which is no doubt how the tax got messed up. Then, like i say, i moved jobs again in July this year back to a large company so the taxes will be dealt with properly going forwards.
I've been on the PAYE system for 20 years and this is the first time I've had anything from HMRC saying that i'm more than about £20 out either way. TBH i find the various codes and whatnot entirely baffling and having spoken to the payroll bod in my current company and shown them the messages from HMRC, it seems that even those who work in the field don't find it clear. I think my tax code has changed 3 or 4 times since I joined my current employer including when i received the most recent message from HMRC. That change was from code K640X to code 964LX
Ultimately i don't see much point in challenging the money owed, I probably do owe it and am fortunate to be able to afford it. My question is, are the tax codes designed so that the £4,500 i owe be incrementally paid over over the remainder of the year either in full or in part through the PAYE system? Or will that £4,500 just sit there until i pay it off via bank transfer? If it will be paid off in part or in full by the end of the year it would make sense to wait and see. But if it's not going to change i may as well just pay it off.
I'm not entirely sure. The pay slips looked fine to me. I went back to my previous employer and spoke to the finance chap who joined not long before I left who was much better informed. I asked him about it and he sent me a copy of a tax letter from HMRC to the employer informing them of a tax code change that they should implement for me henceforth. Apparently the problem was that they hadn't been receiving the letters for whatever reason so a number of people in the company were on the wrong code. I don't think there was any deliberate malpractice in the business or withholding of payments. Why they weren't getting the updates from HMRC I don't know. I got a decent pay rise when I joined but even then I did seem to be getting paid a fair bit, so it wouldn't surprise me if part of that was underpaying tax.
Snubs said:
That change was from code K640X to code 964LX.
It should just happen via PAYE, The numbers in the tax code are the amount of your tax-free allowance (964 = £9,640) so they've reduced that from £12570, which means you're paying more tax.than usual. https://www.gov.uk/tax-codes/what-your-tax-code-me...
Unless they send you an actual demand for payment I'd let PAYE take it's course. Can't recall what the situation is WRT interest on the outstanding tax...
This might help https://www.tax.service.gov.uk/guidance/get-help-u...
Generally speaking if all your income is PAYE they’ll get whatever tax is owed each month via the payroll.
Sounds like whoever was doing the payroll didn’t have a clue. Are you able to check your personal tax account online?
Generally speaking if all your income is PAYE they’ll get whatever tax is owed each month via the payroll.
Sounds like whoever was doing the payroll didn’t have a clue. Are you able to check your personal tax account online?
Thanks for the replies, i'll leave it to run for the time being and see what happens. Yes, i can see all the numbers online. I have the HMRC app on the mobile and access to the further PAYE info online. It was this info I was sharing with my current payroll bod to understand it. I'd just gotten used to it all running smoothly in the background for 20 years so wasn't paying enough attention.
Maybe if change my first name to 'Google' or 'Amazon' HMRC's AI systems will automatically stop following up for unpaid tax
Maybe if change my first name to 'Google' or 'Amazon' HMRC's AI systems will automatically stop following up for unpaid tax
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