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bigduckontax, Accountant
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Can you explain why including the underpayment restriction

Customer Question

can you explain why including the underpayment restriction from my 2015-16 PAYE coding notice (£2,073) in box 8 of SA (underpayments and other debts) generates a tax repayment to me of £830.00 in the "view your calculation" section?
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and happy to be able to help you with your question.
With respect you are confusing coding notices with tax computations. The purpose of tax codes is to make you as far as possible tax neutral at the end of the tax year and in general is remarkably successful to that end. The underpayment restriction in your 15/16 tax code is very likely to be an adjustment from the 13/14 tax year. To put such an adjustment through in 14/15 would put you on a Month 1 coding and skew the PAYE system. It is easier and more convenient to adjust in the year following and that is standard HMRC practice.
When you self assessed for 14/15 the resultant computation showed you overpaid tax to the tune of GBP 830 which explains the refund.
I do hope that I have been able to shed some light on your possible and indeed likely position.
Customer: replied 1 year ago.
Thanks for your response.
I am not sure I fully understand. It seems that in the 2013/14 tax year I underpaid £830, which is being collected in the 2015/16 tax year by reducing my tax free allowance by about £2,075.
Where is the overpayment that is being refunded to me coming from?And am I correct to include the amount in box 8 (underpaid tax for 2014-15 included in your tax code for 2015-16). You are saying the underpayment restriction relates to 2013-14.
I have no underpayment restriction on my 2014-15 tax code.
Expert:  bigduckontax replied 1 year ago.
Sorry. I got it the wrong way round, but the principle is the same!
The refund would appear on the face of it to be coming from the 14/15 tax year as I explained originally.
To which particular tax form are you referring?
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Expert:  TonyTax replied 1 year ago.
It's really quite simple. If you have an underpayment in your 2015/16 tax code which relates to 2014/15 (the tax code note will tell you which year it is for), then you would put that figure in box 8 of the SA110 pages so that you don't pay it twice, once during the current tax year through your 2015/16 tax code and again on 31 January 2016. I hope this helps but let me know if you have any further questions.
Expert:  bigduckontax replied 1 year ago.
I would be delighted to talk to you, but I am answering your questions from a time zone 7 hours ahead of the UK and the call might be a tad expensive! However I am on 006625854819 if you wish to try!
Thank you for your support.

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