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 can also update HMRC of your expected earnings for the next tax year. I had a similar situation and even tho I had gone over the threshold last year they had given me back some personal allowance for this year (as thought my earnings might go down). So I've put in my new salary o get me back to a 0T code.

They are supposed to be bringing in RTI but it keeps getting delayed, under this you’ll have to submit your self employed earnings to hmrc online 4 times a year and the payments you make will be more closely timed to when you are earning the money and actual amounts you report. Self assessment has been with us for over 20 years now so the system of payments on account was designed then and in those days it wasn’t a case of entering the figures in the computer and it told you how much, your tax return had to be sent away to hmrc for them to process

You shouldn’t have a payment on account if your sole income is employment income. It sounds like you might have filled out your tax return form wrong, as all of your income is taxable at source and so it shouldn’t flag for payments on account. You should just be paying the underpaid tax and the tax code should correct next year.

And if it’s a tax code issue it shouldn’t really be more than £2,500 tax to pay (although if your pay is lumpy or with a bonus it’s possible that it might be more).

Have you had your P60 already for 2023/24? It’s early for it to have been produced. And do you have any benefits? And do you have your P11D yet?

I know my tax code was wrong last year as my personal allowance wasn’t abated so I’ve kept
some money to the side, but it’s already rectified for 2024/25 as HMRC now know my full annual salary.

Everything about your posts sounds like there’s a mistake at your end somewhere though.

@DaisyHaites if you read the thread, you'll see the OP has been on a PAYE code giving them a personal allowance of about £23k, even though they are a 45% taxpayer so aren't due one. That amount of money at 45% comes out very close to 11k so it's very likely the calculation is correct.

Of course employers can make errors with payroll processing, however the onus is on the employee to check.

E.g. if I received a letter from HMRC saying my tax code was K50 and my payslip said payroll had applied 1257L, I'd first query with payroll, and if no joy there, then I'd follow up with HMRC.

Well I feel like I have at least learned to be a bit more careful about checking my tax code and tracking tax owed. I am going to call HMRC this morning and see what can be done about correcting this for next year.

What a nightmare.

Ok small update - have just logged in and checked and my tax code has been changed but to 2337T so they are still determined that I should have a massive personal allowance. My estimated tax for 24/25 is c32k when I think it should be more like 50k.

I am so so confused. They know it's not actually 32k as they are asking for tax on account. It seems very arse backwards to me.

@Janome9300 It is all the wrong way round

I don't know when all this happened, I was SE about 20 years ago, briefly, and it was much easier.

I don't even know if you can actually ring at the moment but that info is confusing too.

I'd make an appointment with an accountant. They magically can get hold of HMRC. It's money well spent considering the mess they're still making of it.

You don't want fines to add to your woes

Bit why do they think you have that tax code? There is an explanation for all of them on the beck of the letters about your tax code usually.

@Janome9300

A T tax code is a code that collects underpaid tax - you have no personal allowance with that code.

You couldn't be further from the truth, unreal. My poor team have to deal with people fed mis-information like that too often.

This is what HMRC say about it:

2337
Your tax-free amount for this employment or pension is £23,370.
Definition of tax code part T. T
Your tax code includes specific adjustments because of your personal circumstances. Your employer or pension provider will not change it until HMRC reviews it.

This really does sound like HMRC have got completely the wrong end of the stick about your personal circumstances.

It's rare but not unheard of for them to get two individual records mixed up in their system. I've no idea how, but it causes a lot of confusion and stress to figure out the cause of the mistakes and get them to fix it.

Which is why @Janome9300 needs an accountant. They'll sort out the arrears, prevent fines. She's out of her depth now.

There is no suggestion of any fine thus far! I just need to pay the additional tax by Jan '25. It's sad but I accept it's what I owe. I just don't want to have to do this again next year.

I have now manually adjusted my predicted taxable income on the HMRC site so we'll see if that produces a more reasonable position. I have also made a spreadsheet that i have used to work out my total tax liability for the year and divided that by 12. I can now track actual tax paid against what I think I should be and keep the shortfall set aside at least.

Just wondering if your tax code could end up like that if your spouse had surrendered his/her allowance to you - Marriage Allowance as per the attached link https://www.gov.uk/marriage-allowance

If they somehow think this has happened then could that explain your whacky tax code?

Good thought but no we haven't done the marriage allowance.

Was just on hold to HMRC for 20 minutes, answered all the security questions then it said there were technical difficulties and they had to end the call. Ho hum.

But on your code notice it shows how that figure is arrived at. Something(s) are being added to the basic personal allowance to get to such a huge code!

Give us the full breakdown or a photo with your name etc obscured.

Just a thought - you did declare the tax deducted from your P60 in your Self Assessment return didn't you?

(I had a University professor who hadn't done this every year for 4 years as he said "you already have the figure". He'd been declaring salary from P60 but not the tax...... he had accrued a massive bill that our Collector was chasing him for and he'd never bothered to query it 🙄)

I did! Thank goodness!

If your estimate pay is over £125k your tax code will automatically be a 0T. If you To have a personal allowance of 2333T you must be claiming nearly £23,000 of allowances. I’m going to assume maybe personal pension relief, gift aid, job expenses? Then at the end of year on you SA return its finding out your not eligible for that hence the U/P

Stick 140k into an online calculator and you will see the tax payments are 4.1k per month.

This happened to my husband, it was so stressed. We think it was because of his bonus. They ended up agreeing to him paying additional tax each month. Finally we are fully paid up, and now he does his tax return as soon as possible lol.

I was in same boat last year. PAYE Got it all wrong. I owed £6.5k. Paid it and then they had to pay me back as they got something wrong again. As paid via a pay plan they STILL took money even after this when they had started refunding me as no way to cancel. Shambolic.