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Where Taxpayers and Advisers Meet

Estimated Unpaid Tax 2017-18 included in tax code 18-19

jed1
Posts: 4
Joined: Sat Dec 01, 2018 11:40 am

Estimated Unpaid Tax 2017-18 included in tax code 18-19

Postby jed1 » Sat Dec 01, 2018 12:25 pm

My self assessment tax return has always been straightforward.
For my 2017-18 self assessment tax return I have an 'estimated amount £862 for underpaid tax 2017-18 included in tax code 2018-19'.
Tax Code at start of 17-18 was 1165L . In December 2017 I had a P6 reducing Tax Code to 1097L. (1165- 1079 =860). No idea why Tax Code reduced
Looking at 'view my calculation' this leads to a refund of £585.98.
If I do not include the £862 in 'view my calculation' then tax owed to HMRC is £276.02. (£306.22 Dividend tax - approx £30.00 to be repaid for professional subscription cancelled).
£585.98 + £276.02 == £862.
My income for 2018-19 will be below tax threshold for 3 months salary only (retirement) Code for 2018-19 is 1200L (I need to take off professional subscription £150.00.)
I don't know whether to include the estimated tax amount on my 17-18 SA return. I think that the correct calculation to use is the £276.02 owed to HMRC and ignore £862 estimated amount.
jed1

bd6759
Posts: 2964
Joined: Sat Feb 01, 2014 3:26 pm

Re: Estimated Unpaid Tax 2017-18 included in tax code 18-19

Postby bd6759 » Sat Dec 01, 2018 1:22 pm

In strictness you could get the refund, but if you don't pay tax this year you will have to repay it.

The common sense solution is to work out the correct tax and pay that.

jed1
Posts: 4
Joined: Sat Dec 01, 2018 11:40 am

Re: Estimated Unpaid Tax 2017-18 included in tax code 18-19

Postby jed1 » Sat Dec 01, 2018 2:21 pm

Thank you bd6759 for your reply. I will pay the tax owed £276.02.

robbob
Posts: 2683
Joined: Wed Aug 06, 2008 4:01 pm

Re: Estimated Unpaid Tax 2017-18 included in tax code 18-19

Postby robbob » Mon Dec 03, 2018 10:16 am

I would recommend ringing the hmrc helpline to ask for guidance in this regard, hmrc have been known to have made a few incorrect in year coding adjustments 17/18 and 18/19 that could and probably should be removed - i have know idea if this is the case for you - but it is a possibility.

Normally i would expect to see specific mention in 17/18 code that there was a potential underpayment being coded the following year - this may be on the notes on the december 17 code change even though the adjustment there is reducing your tax code.

Note in the absence of you confirming with hmrc they will likely amend the return to match whatever is on their computer whether that is right or wrong - so if you choose to pay 276.02 hmrc may simply remove this amount from the calculation 5/4/18 on the basis they expect you to pay it ye 5/4/19 - if thats the case ensure you add the amount of tax due to you 18/19 calc.

Hopefully you will get suitably trained person who can explain everything in a manner that makes sense.
Hopefully hmrc haven't further complicated tings by doing p800/simple assessment calculation in error too.

Note if you do need to include "tax coded out to following year" on the 17/18 year - it should be the amount of tax at stake that you enter on the return NOT the coding adjustment - this being the actual tax mentioned as being transferred between tax years and not 862 amount of code change - i suspect you have included the 862 in your adjustment when comparing the two calcs.

Ridiculous how hmrc can make an easy self assessment calculation become stupidly complicated simply by messing with the tax codes when there was no need.

Final note for future reference there is a box you van tick to say "don't code out future potential income sources in year" - normally the hmrc adjustments apply when they know individuals have dividend income/rental income and they don't tick that box - if you tick the box the "presumed" tax due based on prior years will be left off the tax code leaving things to be sorted on the tax return.

jed1
Posts: 4
Joined: Sat Dec 01, 2018 11:40 am

Re: Estimated Unpaid Tax 2017-18 included in tax code 18-19

Postby jed1 » Mon Dec 03, 2018 2:20 pm

Thanks robbob for your comprehensive reply. I will speak to HMRC. I have not had an estimated figure like this before. I wonder if it's partly because of the tax free dividend allowance going down from £5000 to £2000 for 2018/9. I know the correct amount that should be paid as my return is so simple and the correct amount to be paid to HMRC is shown when I use HMRC's estimated figure of £862 in the calculation.


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