AIBU to be upset my PAYE tax was so (11k) wrong?

[Janome9300]

I have just (very early and efficiently) done my tax return.

Although 100% of my income is from a single employer and I am fully PAYE I owe an additional 11k for 23/24. In addition they are demanding a 5k payment on account for next year so I need to come up with 17k by 31 Jan next year.

I have been through all my payslips and done the maths manually and they are correct about the additional owing. I need to put away 1.7k a month between now and the payment date.

I am so sad. I have had money owing before but it is normally a couple of thousand, this has been a real shock. Thank god I did the calculation so early so I have a hope of scraping it together. I don't understand why it has been so wrong at source. I haven't had a massive pay increase or anything.

You don't need to "argue that point" re payments on account. It's entirely up to you to tick the box on the tax return to zeroise/reduce them. HMRC won't care and won't argue. If it turns out wrong, they'll just charge interest when the real figures are known next year.

I wonder if I ticked a wrong box then - it just said I would owe 5k in Jan and 5k in July next year as well as the 11k for this year gone. I have not submitted it yet so I will go back through and see.

While we're on a tax thread, does anyone know whether you can make payments to HMRC throughout the year? It would make my life easier if I could just pay 20% in every time I got a payment (perhaps once or twice a month). And yes, 20% is right - I don't pay NI now.

if your salary is £140k and your tax code is 1257L it should ONLY be £4500 underpaid (the PA now taxed at 40% not 0%)

So what else is being added to your normal salary to bump up the taxable income?

Been there as well in a year with a hefty redundancy payment then a bonus in the next job. Ours was clawed back via PAYE just after we'd put most of our savings into a new house and didn't have much flex to suddenly be taking substantially less home for a few months.

Big learning curve and we always keep an eye on it now as our experience is that between them HMRC and payroll can and will cock it up between them!

I am on tax code 2361tm1 which seems to be an emergency one (from googling). Again, no idea why - I will call HMRC and see if I can work it out.

I am sorry you had this but also slightly relieved it isn't just me! I would obviously have noticed if the tax had halved overnight or something but otherwise I tend to assume things are reasonably in hand. Have learned my lesson now!

You can, but hmrc will only allocate the payments to a liability due in the next 30 days. So if your hmrc account got hacked someone could claim a repayment of any amount unallocated. In your circs just open a sep bank account and pay your 20% in there so you have a lump sum when the tax is due.

Yes definitely, we watch this so closely now and have realised that anything over 100k probably will get taxed too high / low and we don’t want any surprises when we submit the tax return. We also do this mega early in the year so have time to save the money to overpay if due

Is this because you earned over £122k in the last tax year? You basically start losing the tax-free allowance once you earn £100k a year, which is why you need to do a tax return. By the time you reach £122k, the allowance is all gone but your tax code won’t have changed until you hit the £100k mark.

You can pay the tax on account in instalments if you can’t afford to pay it in one hit.

2361 m1 explains it I think

If you had that applied all year, it assumed a personal allowance of £23,610 whereas ultimately you weren't due one at all. So 23,610 @ 45% is £10,624 which isn't far off what you owe.

It's just such a bizarre code to be on. You need to speak up HMRC to get it changed though, or you'll have the same thing again next year and you'll get charged a year of interest on it (if you've changed those payments on account to zero)

Payroll and HMRC aren't "cocking it up" it's just a shit overcomplicated system that no-one seems to be capable of fixing.

Do you need to claim higher rate tax relief on your pension contributions?
That might explain the tax code being higher than the personal allowance?

Appreciate your help here I will call them tomorrow and try to sort it. At least I now know what the issue is/was.

I love mumsnet at times like this, I knew someone would have some insight. Feel a complete tit though for not noticing the weird code, will be checking every month from now on.

You need to tick the box that asks if you want to reduce the payments on account.

Even then it’s only ~£4k

It's actually your workplace HR / payroll department who have stuffed us here - they choose what tax code to use, it's not something they get from HMRC. You need to speak to them (and if it were me I'd have a real go at them for getting this so wrong) and tell them to get you on the right code asap.

Is it? I've always been told to speak to HMRC when there's been issues!

I had no idea anyone lost their personal allowance. Such a shit overcomplicated system.

This is rubbish. Hmrc send the paye code to the employer, the employer doesn’t just make one up 🙄

As per screen grab. Hmrc send code to the employer

Not necessarily:

re your PAYE tax code comes from
The PAYE code used by the employer may come from a number of different places: they will either be calculated and issued by HMRC or the employer will use a standard code according to rules set out for them by HMRC.

It's really not, unless I'm imagining the endless tax code letters we receive from hmrc for our employees.

This is not true. Employers are sent the code to use for each employee by HMRC or have to allocate for new joiners with no P45 in accordance with a standard set of rules. You are posting utter shite on a subject about which you clearly know zero.

This is complete rubbish. I really wish people wouldn't contribute to threads when they clearly don't know what they are talking about.

I have to add here as well. Employers cannot just make up the code employees are on. They're legally obliged to use the code HMRC send them. If someone is new in role, they are obliged by law to use the answers given to them by the employee on the new starter checklist to work out the code. This is really clearly defined and there is no scope for them to "choose". Payroll teams get a lot of unfair stick for this, but really we all need to be much more on top of our own tax affairs and actually speak to HMRC if something doesn't look right.

Do you claim child benefit? Could part of the tax owing be needing to pay that back?

If you can work out why you have underpaid, then work out what tax code you ought to be on, then you are in a better position to work out whether or not you should reduce your payments on account.