Personal allowance reduced

[loveyorkshiredales]

I have filed a Self assessment return for my husband for Child Benefit Charge in Oct 24 and tax was due and made the payment in January this year.HMRC has decreased DH s personal allowance by £3700 approx for next year,as £1480 tax due from last year. He has this money sitting in Self assessment credits. Will this be readjusted or need to speak to them?
They adjusted the tax code before deadline of 31/01/25. In previous years, i used to file the tax just after 20th Jan, for this year's tax I thought file it earlier and make a payment before deadline.
Please advice

This is another question that needs answering by a professional in this area.

Don't you have an accountant?

Sorry no accountant.

Then it might be a good idea to get one.

A good accountant should save you the cost of his own fee in reduced tax for you plus peace of mind.

Unless it is a Limited Company you don't need a Chartered one. (They cost an arm and a leg anyway) I've used a one-man-band for years without any problems.

we only have to file Self assessment for paying high Child benefit charge,which is usually a 5 min job, never had an issue and didn't see the point of paying the accountant fee.Not sure why they haven't wait until 31/01 when the payment was due before adjusting Tax Code. I'm thinking usually they adjust the tax codes etc in November, as I filed in October and system has picked it up.

We used to have the accountant before when we had rental property and husband was also doing another SA job, then we started doing it by ourselves.

If you file early (could be end Oct?) then you can pay the bill by way of reduced tax code. If you file in Jan (as its do) you don't get that option and have to pay 'cash'.

Did you want to pay from your bank account rather than a revised tax code? If so, call hmrc (the wait has never been as long as i fear!) and speak about the options

I had a little operation done on my face and it's uncomfortable to speak with someone at this moment , DH don't have the patience on phone as working and looking after children plus cooking. He has too much on his plate right now.
Yes I wanted to make the payment via bank as it will cost him more by making changes to the tax codes by £600 approx.

Why would it cost more or less depending on how they collect the money?

It states in a letter he will pay more than £2k in tax than usual because of this re adjustment to his tax code.

I vaguely recall there os a section on the form where it asks if you want to have your tax code adjusted for the future years so you may have selected yes to that. I imagine if you overpay through tx through the year compared to the charge die you will end up with a refund when you file your SA next year

If you cannot call, webchat is available Monday to Saturday. However, as it is your husband's tax account - he will need to make contact or say you can act on his behalf.

PAYE coding out is usually done as easier, but if you would rather pay as a lump sum HMRC will let you do this.

https://www.gov.uk/government/organisations/hm-revenue-customs/contact/income-tax-enquiries-for-individuals-pensioners-and-employees

He will pay the same amount however he pays as it will work out in the end, although that might not be the case if the adjusted tax code and he's affected by the loss of personal allowance above £100k taxable income. Although if he earns that much, you won't get any CB at all so then it would likely be worth cancelling the claim altogether or you just claiming the NI credit if you need to.

But I'd probably leave it for now as these things sometimes work themselves out, given time.

If not, when you're able to speak to them, I'd do that, they may be able to refund the money or apply it to your DHs account and send out an updated tax code.

In future it's probably worth doing the tax return as soon as he gets his P60 and P11D if applicable (usually by June/July after the tax year ends) as then you should be able to get into a routine of paying the extra tax as you go along in his tax code. As you say this is his only reason to do a tax return, you don't need an accountant.

If you file before 30 December you can tick a box asking them to try to collect it by changing your tax code for next year as opposed to you paying by the end of January. But you have to actively select it.

If you log into your online tax account there should be an explanation.

This is why I don’t bother with child benefit anymore! The faff of doing a return just for that and then to give back most of the CB anyway!

sorry that doesn’t help your actual question. I’d get an accountant too

Why on earth would you need an accountant for a trivial personal allowance question? That would be a total waste of money

. I don't recall actively ticking the box to collect it via PAYE, system has generated a letter to pay the tax owed in lump sum by 31st January. I'm very confused. Looks like they have automatically enrolled DH as he meets the criteria for tax payment via PAYE. I wasn't even aware of this option. Always filed it in Jan and paid in jan in full.

His income has also increased , usual pay rise for civil servants,not sure whether this £2260 figure stated on the tax code letter , also included tax on the pay rise as well.
I'm thinking 2262-1482=780, he will be paying more as his tax code adjusted and put him into more higher tax bracket

Maybe, maybe not.

I've found from some MN posts that often a backstory comes out.

Better to have all the cases covered IMO.

Even if you have to pay most of it back, it's a quick and simple admin job. Most people would think it's worth 10 minutes doing this when it's gaining them hundreds of pounds or more.

What is the "AIBU" here?

It is just a timing mistake on HMRC side, very easy to fix and do it before the new tax year starts. Call them and say that the tax notice they issued is incorrect as the tax was already paid, say when the payment was made and they will allocate the payment to the correct tax year and issue a new tax code that will be used in 25/26.

as to the 3700 reduction, it is the correct amount to collect the tax owed. 3700 x 40% tax is 1480 that they think you need to pay.

i am an accountant and do my own returns but this is not my bread and butter.

Don't worry too much because the code will get adjusted again. The system needs to catch up with any payment taken. Going forward the child benefit charge is usually done through the tax code for paye

I got a tax code notice yesterday with a reduced personal allowance for collection of child benefit. It was collect the child benefit in advance rather than for the 2023/24 year that's just had the return - is yours the same? It will tell you on the letter which year it relates to

Also, the adjustment to the tax code was a couple of thousand, but the impact on tax paid will be the tax due - given you're repaying some of the child benefit I assume that would be at 40% of the adjustment

Is it to stop him being in same situation next year when he files 24/25.

Log onto his government gateway account and you can message them if you don't want to talk to them.

The app is really good - would recommend to all tbh.

This can all be sorted via his online personal tax account - there’s the option to view his account and adjust the paye codes. The new paye code will be for next year whereas the safe turn was for last year, so two different years of dues.