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Where Taxpayers and Advisers Meet

PAYE - Owe HMRC some tax question

l116747
Posts:2
Joined:Tue Aug 09, 2022 1:46 pm
PAYE - Owe HMRC some tax question

Postby l116747 » Tue Aug 09, 2022 2:10 pm

Hi,

This maybe an obvious answer, but the wonderful world of tax really confuses me. I work for a company and earn around £75k. My tax has been really messy over the last few years due to a company car which I got rid of in April 2020.

Earlier this year in March I received a letter from HMRC telling me that I owe £1001 tax from an earlier tax year, and therefore my tax-free allowance would be adjusted and reduced by £2503 so that HMRC can collect the £1001 I owe by 5th April 23.

I just wanted to check if that amount seems right. I would have rather paid £1001 in a lump, as my salary is now down by about £140 each month.

I may be looking at this stupidly, so please forgive me

Thanks in advance

darthblingbling
Posts:698
Joined:Wed Aug 02, 2017 9:09 pm

Re: PAYE - Owe HMRC some tax question

Postby darthblingbling » Tue Aug 09, 2022 7:58 pm

£1001 is 40% of £2503 so yes that sounds right.

If you prefer to pay as a lump sum you can do, just give em a buzz. They should also remove the payment from your tax code, albeit you may need to chase them to fix it.

l116747
Posts:2
Joined:Tue Aug 09, 2022 1:46 pm

Re: PAYE - Owe HMRC some tax question

Postby l116747 » Fri Dec 30, 2022 2:41 am

Me again. I got another letter last week saying I have not paid enough Income Tax so far this tax year. You currently owe another £301.60. This is for a second job I just started and I was put on a BR tax code for one month. This has now been reflected to the correct code

They have said that they will start to collect this amount straight away, and to do this they have reduced my tax-free amount by £2,479, so that we can collect the £301.60 owed. I’m thinking the amount of £2,479 seems a bit high just to collect £301.60.

bd6759
Posts:4254
Joined:Sat Feb 01, 2014 3:26 pm

Re: PAYE - Owe HMRC some tax question

Postby bd6759 » Fri Dec 30, 2022 11:36 am

It probably is about right. That code will be not be on a cumulative basis, meaning that it will only apply to the remaining 4 paydays. So although an adjustment of £2479 might ordinarily collect £990 over a year, when applied only to the last 4 months it will collect about £330.

RoryDickerson
Posts:6
Joined:Thu Mar 09, 2023 6:10 pm

Re: PAYE - Owe HMRC some tax question

Postby RoryDickerson » Sat Mar 11, 2023 9:16 pm

It's understandable to be confused about taxes, as the system can be complex and often varies depending on individual circumstances. However, I can try to provide some clarification based on the information you've provided.

First, it's important to note that if HMRC has determined that you owe taxes from a previous tax year, then it's likely that they have conducted an assessment based on the information they have available. If you have any doubts or questions about the assessment, it's best to contact HMRC directly to clarify the details.

In terms of the amount owed and the adjustment to your tax-free allowance, it's difficult to say without knowing more about your specific tax situation. However, it's possible that the adjustment is correct based on the amount owed and the tax rates for your income bracket.

If you would prefer to pay the amount owed in a lump sum rather than having your tax-free allowance adjusted, you can contact HMRC to discuss your options. They may be able to arrange a payment plan or a lump sum payment if that is your preference.

Overall, it's always a good idea to keep track of your tax records and communicate with HMRC if you have any questions or concerns about your taxes.


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