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Where Taxpayers and Advisers Meet

Incorrect PAYE code applied by employer

silo
Posts: 2
Joined: Tue Jan 23, 2018 4:51 pm

Incorrect PAYE code applied by employer

Postby silo » Tue Jan 23, 2018 4:57 pm

Hello,

I'm an employee of a company, and have been with the company on the same salary for two and a half years. My salary is £110k, and having filled out my self assessment, I've found myself with an underpayment of ~£4600 for the tax year 2016-17.

It appears that HMRC sent my employer a "K" tax code in March 2016, as they'd estimated that I should have no personal allowance. However, I was taxed on 1100T, resulting in this underpayment.

I've read various articles around this, but am not sure if it applies to my circumstances or if the articles are outdated. Am I liable for this tax, or would HMRC chase my company as it's their misapplication of the information sent to them?

Many thanks
Silo

robbob
Posts: 2807
Joined: Wed Aug 06, 2008 4:01 pm

Re: Incorrect PAYE code applied by employer

Postby robbob » Tue Jan 23, 2018 7:15 pm

did you not check to see that the employer was actioning the right tax code? if not that's a pretty basic check you would normally be expected to do IMHO.


Anyone earning over 100k is obliged to register for sa and therefore adjust for the tax due at a later date - so i guess its fairly hard for that person to argue that they thought they would owe no tax when they know their earnings are over 100k and they havent done any calcs and havent checked that their tax code is correct.

silo
Posts: 2
Joined: Tue Jan 23, 2018 4:51 pm

Re: Incorrect PAYE code applied by employer

Postby silo » Wed Jan 24, 2018 10:42 am

Unfortunately I didn't check. I'm very much "an employee" and not particularly accountancy savvy. Had I known the stress that I'd have to go through with self assessment (last year was a nightmare and I'd underpaid by 14k), I'd have asked for a lower salary.

robbob
Posts: 2807
Joined: Wed Aug 06, 2008 4:01 pm

Re: Incorrect PAYE code applied by employer

Postby robbob » Wed Jan 24, 2018 3:00 pm

Had I known the stress that I'd have to go through with self assessment (last year was a nightmare and I'd underpaid by 14k), I'd have asked for a lower salary.
Well certainly there is a better option than giving up pay - chucking some cash into a personal pension reduces your relevant income for the calculation of how much personal allowance is removed - you probably only need to fork out 4k overall (8k in 4k tax refund) to get 10k (2k added in by hmrc on top of 8k) into your pension and your income down by 10k - this only really applies when you are in that taper zone where you lose your personal allowance. Note if you have pension payments deducted from net salary or paid privately ensure you include these on your tax return as they both count normally for minimising the pa removal and lowering the overall tax

Unfortunately I didn't check. I'm very much "an employee" and not particularly accountancy savvy.
You are far from being alone here in that most either presume or hope that everything will be ok - i guess a tax code you don't understand is a like a funny unknown noise emanating from your car - it may be nothing and it may go away - then again it may mean that something bad will happen sooner or later. HMRC expect that you are the equivalent of a skilled mechanic in that regard when they send out the tax codes. If its any consolation i am sure even skilled mechanics struggle at times :(


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