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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15940
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I am an OAP.Retired as a NHS doctor in 2013.All my pay was

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I am an OAP.Retired as a NHS doctor in 2013.All my pay was taxed under PAYE system.In tax year ending 2013 I received back pay from 2008 to 2013 taking my pay over116000 pounds.I did not filled in a tax return that year as the tax office had stopped sending me a self-assessment form for 4 to 5 years before 2013.My last year salary was about 74000 pounds.I received a request to fill in a tax return as my earnings were higher than usual.I managed to locate my p60 for that year and filled it in accordingly.Now I have received a letter asking for 3700 pounds underpaid tax plus over 500 pounds as fines.They have taxed my total income without personal allowance as total income went over 100,000 pounds.If PAYE system miscalculated my tax,am I responsible.What can I do? Do I bite the bullet and pay up?Good advice much appreciated.
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.

Hi.

Can you tell me why you received salary for 2008 to 2013 in 2013 please.

Customer: replied 1 year ago.
I was a staff grade doctor who was regraded to Associate specialist in 2008 but only received the back pay in June2012.
Expert:  TonyTax replied 1 year ago.

Thanks.

Leave this with me while I draft my answer.

TonyTax and other Tax Specialists are ready to help you
Customer: replied 1 year ago.
Thank You.
Expert:  TonyTax replied 1 year ago.

I will finish drafting my answer and then call you if that's OK. I'm almost done.

Expert:  TonyTax replied 1 year ago.

If you look here, you will see that payments on pension arrears will be taxed in the tax year of actual payment as your arrears of salary have but that the taxpayer can have the pension arrears assessed in the tax years in which they were paid with the tax deduction in the actual year of payment being used to cover those liabilities.

Now look here and here. Payments on salary arrears are taxed in the actual year of payment. It says that legally, the tax liability arises for the tax year in which the salary should have been paid. If you look at page 22 here, it tells employers to allocate arrears of pay to the tax years in which they should have been paid but as you are retired, they cannot do that. Therefore, you need to write to HMRC to ask them to allocate the salary arrears to the correct tax year (as with arrears of pension payments). You will need to get the payment you have had split between tax years by your forner employer to send to the tax office.

I hope this helps but let me know if you have any further questions.

Expert:  TonyTax replied 1 year ago.

I'll call you in about 10 minutes.