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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15979
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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, I am on PAYE and receive no other payments etc. My salary

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, I am on PAYE and receive no other payments etc. My salary is 120k so I am required to fill out a tax return every year. And every year they tell me I have underpaid tax and am required to pay more. Over the last few years this has varied between about £1,000 and £8,000. The only figures I fill in are the gross pay and tax deducted figures in the bottom right of my P60. Do I need an accountant?


You don't need an accountant but you could always have one review what you have done when before you submit your tax return. If all that goes into your tax return is your salary and tax and you have no employment benefits such as private medical scheme or a company car, your tax affairs are simple.

I suspect the reason you are underpaid each year is due to the fact that you earn over £100,000 per annum and that you lose £1 of the personal allowance £2 of income over £100,000. Take a look here on what your adjusted net income is purposes of the personal allowance.

Unless you know exactly what your income next tax year is going to be before it starts so that you can have your personal allowance adjusted or you aren't prepared to forego any of the personal allowance whole of the tax year, then there may be an underpayment at the end of the year.

If you had the personal allowance removed from your tax code as you thought you would earn over £120,000, the point at which you lose it all in the current tax year, and you earned less than £120,000, then you will probably be overpaid at the end of the tax year.

If you receive child benefit, that will also be taken back as you earn over £60,000 per annum. There may also be tax underpayments being collected through your tax code which need to be taken account of when squaring up at the end of the tax year.

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

Customer: replied 3 years ago.
That's really helpful. My salary is £122,000 PA and has been four years. It doesn't vary though the gross figure in my P60 this year said £109576.68. Sounds like I need someone to have a look as I don't really understand the variation. Am I missing something obvious?
It might be obvious to me but not necessarily to someone who doesn't work in tax living so don't be too hard on yourself. An accountant or tax adviser would not charge much to look at your last few tax years calculations and tax codes and to explain the problem which is what I have tried to do.

You will find the personal allowances last several years here.

In 2014/15, the personal allowance is £10,000. If you earned, £110,000, you would lose half of it (£1 £2 of income over £100,000). At £120,000, you lose it all. If you have had the personal allowance whole year, you will almost certainly owe tax.

The only way to get your income down purposes of preserving your entitlement to some or all of the personal allowance is to pay pension contributions or make gift aid donations. Take a look at the adjusted net income link I gave you in my previous post.
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