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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15975
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I have an issue with an under payment on tax? which I don't

Customer Question

I have an issue with an under payment on tax? which I don't belive is correct can get hold of the tax office to resolve and getting no sense at all.
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
Hi. Can you give me some more information please. Have you received a P800 tax calculation? If so, which tax year is it for? How much is the tax underpayment? Are the income and tax deducted figures shown on the P800 correct? Did any of the sources of income you had in that tax year start in that tax year or the previous tax year? What are the sources of income, earnings, pensions, interest?
Customer: replied 2 years ago.

It changed with my tax code notice this year, its gone from 540L to K50? they say an under payment of £7005? not sure where this has come from. I claim two things on my self assessment, business mileage expenses at £3700 and declare the child benefit my wife gets? but that is all.

Expert:  TonyTax replied 2 years ago.
Thanks but I really cannot do much with that I'm afraid. Can you let me have the following information:

1 Which tax year are we dealing with? Where is the underpayment of £7,005 mentioned?

2 Are you employed? If so, what was your salary for the relevant tax year? Were you in receipt of taxable employee benefits such as private medical insurance and/or a company car as reported on a P11D? If, so what was the value of the benefits? Did you report any other income sources in your self-assessment?

3 How much child benefit was claimed?

4 Did you receive any business mileage reimbursement from your employer? If so, if the claim for £3,700 net of the reimbursement?

5 Is it the 2015/16 tax code which has changed from 540L to K50? Where is the underpayment of £7,005 mentioned?
Customer: replied 2 years ago.

Tax year 2015 -16

Employed, I take home £70,000 per year, 50,000 basic the rest in bonus. I changed into a company car in Feb this year but my code was adjusted immediately.

Child benefit was £1200

The under payment was mentioned in my tax code notice.

Expert:  TonyTax replied 2 years ago.

Now we are getting somewhere.

Can I ask you to look at your tax code please. Next to each entry is a note number and they refer to notes on the back of the coding notice. Look at the one which mentions the tax underpayment of £7,005 and tell me what it says. In particular, does it mention the tax year to which the underpayment relates? Is the figure of £7,005 shown as a direct deduction from your personal allowance in your code?

Would you also tell me what every entry in the tax code is please.
Customer: replied 2 years ago.

One is underpayment and links to note 3 and it states an under payment of £2802.00 for the year so they are reducing my tax allowance by £7005 to cover this? I don't understand why there is an under payment? my salary was the same as the previous year and I claimed the same in business mileage.

The second is Child benefit where we claimed £1788.80 they have reduce my allowance by £4472.00, I know I have to pay this.

Personal allowance = £10600

Job expenses at £364? this should be £3500 but less now as I am not claiming mileage allowance

Total £10694

Under payment restiction -7005

Child benefit -4472

total - 11477

tax due on - 513

Its the underpayment I need help on as I don't know why?

Expert:  TonyTax replied 2 years ago.

Leave this with me while I draft my answer.
Expert:  TonyTax replied 2 years ago.

Hi again.

The underpayment in question is £2,802. The figure of £7,005 is the deduction from your allowances that is required in order to be able to collect £2,802 through your PAYE at the 40% income tax rate.

You say that the tax code was changed as soon as you got a company car in February 2015 so I doubt the underpayment of £2,802 is for 2014/15 but it is possible. It's more likely to be from 2013/14 or an earlier tax year. I suspect that its related to child benefit and other discrepanies in your tax codes if it is correct.

Tax on child benefit started in January 2013 so for the 2013/14 tax year, tax was due on 13 weeks of child benefit. If you completed a self-assessment tax return for 2013/14 and you omitted child benefit as many taxpayers have, then HMRC would notify you by issuing a SA302 tax calculation informing you of their view of your tax position. It's also possible that they only picked this up shortly before the deduction of £7,005 appeared in your tax code.

The only way you can find out where the underpayment came from and if it is correct is to call HMRC on the number here. The best time to call is at 8am Monday to Saturday. Ask them how the underpayment is comprised if it is for more than one tax year and to issue an SA302 tax calculation for any tax year involved if you completed a tax return for that year or those years or a P800 tax calculation if you didn't complete a tax return for that year or those years. Looking at those will allow you to check the figures and take up any discrepancies with HMRC.

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

Expert:  TonyTax replied 2 years ago.
Just a correction. 13 weeks of child benefit was taxed in 2012/13 (not 2013/14) for those whose income was over £50,000. A full year of child benefit was taxed for 2013/14 for those whose income was over £50,000.