Tax code help please

[LillethCrane]

I have just completed my self-assessment for the second time as I claimed child benefit between 2022-24 and earned 52k each year so opted to pay back the charge through my PAYE tax code.

I am on track to earn less this year so have adjusted my income estimate accordingly and I have been issued a new tax code.

I just don’t understand the figures. It says I underpaid £872 in tax last year, but my tax code is adjusted to take £3316 (was £4363 from April until now) from my personal allowance.

I’m sure there’s an obvious explanation I can’t see so thought I’d ask here!

They’re adjusting your tax free amount (personal allowance) down by £4363. That means you’ll pay an extra £4363 x 20% = £872, which is what you owe. HTH!

The personal allowance is the amount you earn tax free. You have to adjust it by the gross amount to get the tax right.

If they adjusted it by £872 you would only pay tax on £872 (ie about £250)

So to get an extra £872 out of you they need to take 872 / 0.2 (approximately)

As an aside, don't opt to have things coded into your tax code if you can avoid it. They're incapable of getting the calculation right and you'll end up in a never ending chain of these kind of calculations.

Thank you both for your explanation- tax is like another language to me!

@Tarantella6 I’ll bear this in mind, hopefully it won’t be applicable next year as I’ll have earned under the new 60k CB threshold…