Change of tax code

[Snarf]

Evening all,

Ill just pre-empt NLUK - I have emailed my accountant but its 7pm on a friday

So Ive just got in from being on site with a client all week and I have a letter from HMRC telling me that my tax code is being changed.

It doesnt go into much detail but says that my new tax free allowance is £31 giving me a tax code of "3L X" It then says on the reverse of the letter "Although we are changing your tax code(s), you may still not pay enough tax by april 5th 2017. We think the amount you will owe HMRC is £XXX. we will let you know if this amount is right when we look at your tax return for the year." - Other than the amount that is verbatim.

It then goes on to say "Your tax code has changed because of information in your tax return".

Is this them trying to guess at what Ill be owe this year based on last years return? I suspect so but could do with clarification as if this is EXTRA money that they want on top of the tax for this years income tax then Ill need to do some budgeting!

Thanks in advance.

[Jessica@WhiteFieldTax]

It's likely to be one of two things

(A) trying to collect last years tax through this years paye
(B) using information from last year to second guess this years tax and collect through paye

It's possible you / your accountant ticked one of the SAR boxes around collect what you can through my tax code. I think they sometimes default to ticked, and TBH it's a nuisance in many cases.

Without seeing the detail of the tax code can't comment further but its not extra tax per se, just a ham fisted way of collecting what they think is due.

Go back to basics on estimating your tax, and you won't be far wrong. SAR trumps tax code in any event.

There is an online form to email HMRC and tell the, of tax code errors but unless you know what's wrong it's not helpful. Anyway why have a dog and back yourself, get your accountant on it.

HTH and don't worry

[Snarf]

Thanks thats what I thought, it must be pre tempting this year's tax.. I wasn't liable for any last year this was shown on my return.

Thanks for putting my mind at ease!

[NickFitz]

In previous years I've got one of these, then got another one setting it back to the original value within a week or two. My accountant said it happens because of the way HMRC processes P11D returns: they enter the details from the P11D and it triggers an automatic tax code change, then the details are approved or whatever and it triggers an automatic reversion to the original code. And their systems spew out a letter to go with each automatic change

[VectraMan]

I had this, and when I phoned up they said they'd expected me to earn >£100K in the remaining 4 months of the year. It was sorted out, then they did it again for the start of the next year. That time I just filled out the form and received a correction after a couple of weeks.