HMRC letter says I owe £6k+ tax

[AnnO'Neemus]

Eek! Just received a letter from HMRC saying I owe nearly £6300 in tax this financial year!

I have received some Universal Credit when I was unemployed. (I was 'let go' from a new job in October 2022 after only a week due to an unforeseen conflict of interest and it took me nine months to get a new job.)

I did an unpaid internship for 12 weeks in France as a participant in the Turing Scheme, from late April to mid-July.

I only worked from 18 July to 8 September as assistant manager of a deli/wine bar.

End December 2023, paid just under £400 accrued holiday pay that I'd been owed.

End September, paid around £600 because I'd only worked for a week and a bit.

End August, paid around £2k for August salary.

Early August, paid £900 for July salary started mid-month.


Then I've been employed in my current role from 1 November.

End December, paid just over £2k for December salary.

End November, paid around £1,600 for November salary.

I've only been paid about £7.5k this year - because I've basically only been in paid employment for about two months mid-July to early September, and then November and December, so how can I owe well over £6k in tax?!?!?

The letter says they're adjusting my tax code and they will be collecting around £340 each month from now until the end of the financial year, and also adjusting my tax code for next year to reduce my personal allowance and increasing deductions.

Make it make sense. Please?!?

As a single person, I should have the standard £12570 tax-free personal allowance.

 

[Monkeygrinder's Organ]

Does it have a breakdown on it? Any further info on calculation? Sounds like they've got an incorrect income figure from somewhere.

 

[Elpenor]

Is this tax or taxable pay? To owe £6k in tax you’d likely to be earning £40k+ and have paid no tax on that income

What tax code were you on while in employment? And were you paying tax each time you were paid?

Do you have any other form of income eg a work pension you are taking, self employment etc?

This sounds like you need to call HMRC to get to the bottom of it

 

[Silas Loom]

Do you have all your P45s from the previous employers?

Don’t panic. Collect what info you have, then call them. They’ll help you get to the bottom of it.

 

[ATOMIC SUPLEX]

Another vote for don't panic and call them. I have had crazy tax issues that were not my fault and quite confusing. Talk it though on the phone. Document, date and sign everything. . . . but in my experience they will go through everything and every bit of weird procedure with you until it is resolved as best as it can be.

 

[Dr. Furface]

Eek! Just received a letter from HMRC saying I owe nearly £6300 in tax this financial year!

Does it say it's for work you've done this tax year, ie. since April 2023? I'd have thought it would be for 2022-23, and possibly before that too?

 

[DaveCinzano]

My instinct is to call them up and speak to them.

Have a summary of when you were working and what you were paid to hand - like this post - so you can present your information clearly.

List your questions/expectations on a sheet of paper as a prompt, and leave space to fill in the responses from your call (e.g. 'I don't think I need to pay this amount', 'What do I need to do to have this rectified?', and HMRC's response: 'You need to call this number', 'You need to fill in this online form' etc).

Make a note of the person (name, job title) and the details of the call (time, number called, any call transfers).

Follow up with actions to any responses.

Break it down into small, actionable parcels and keep notes!

Best of luck - my experience of dealing with HMRC in similar situations has always been that it has ultimately been relatively straightforward to rectify so long as you take it step by step.

 

[what]

I had something similar to this years ago.
Was a mess up at the tax office.
I rang them and was sorted very quickly

 

[hash tag]

Is it a genuine HMRC communication?

 

[Thora]

Which tax year is it for? Last year April 22-April 23?

 

[moochedit]

Is it a genuine HMRC communication?

Good point. OP said letter not email but that doesn't rule it out being a scam. I wouldn't ring a number shown in the letter without googling to check it first.

 

[Boudicca]

Is it a genuine HMRC communication?

Gosh yes, do check the phone number in the letter against the HMRC website.

 

[Puddy_Tat]

Eek! Just received a letter from HMRC saying I owe nearly £6300 in tax this financial year!

very

sounds legit (as in from HMRC) rather than a scam - a scammer would more usually contact by phone or e-mail, and try and panic you in to making an immediate payment, rather than sending a letter and say they will deal with it by adjusting tax codes. but may be worth checking the contact number on the letter.

but sounds like someone somewhere has made a fairly large scale balls-up.

was there one week / month that involved a big pay packet (e.g. arrears of pay, or a bonus or something)? If someone or the system has assumed that was a typical week / month, then it might have got tangled.

from what you have said on other threads about the deli / wine bar job / owner, i'd not be surprised if they have buggered something up. although being out of the country for a few months might have confused them.

i'd agree with what DaveCinzano has said - and having as many pay slips / P45 etc as possible to hand when calling them. and if they do ask for documentation, don't send them any originals without taking a scan / photocopy first.

my usual inclination would be to try and deal with this in writing, but having had a letter from them last week in response to a (much more minor) enquiry i wrote to them about in late february, that might not be such a good idea.

hope you get it sorted.

 

[moochedit]

Gosh yes, do check the phone number in the letter against the HMRC website.

 

[Puddy_Tat]

I have received some Universal Credit when I was unemployed. (I was 'let go' from a new job in October 2022 after only a week due to an unforeseen conflict of interest and it took me nine months to get a new job.)

another thought - do they owe you some money?

if you were working from april to october 2022, then on UC / not working until april 2023, you'd have been paying tax from april to october on the expectation of being in work all year - you get 1/12 of the personal allowance each month or 1/52 each week (or whatever fraction depending on how often you get paid) across the whole year.

have they already sorted that out?

View attachment 407304

that's all very well if you can create a personal tax account - mum-tat is in a minor tizz about something, but can't create an account online, as she doesn't have a passport or driving licence to prove she exists, so i've suggested she writes to them.

 

[moochedit]

You could sign up with their website or app which would allow you to see how much each employer has declared to them.

 

[heinous seamus]

I had a similar unexpected tax bill once, and it turned out they were working on the assumption I'd been on JSA for the whole tax year rather than just a couple of months. I had to track down the correct DWP department to confirm how much JSA I'd actually received.

 

[moochedit]

another thought - do they owe you some money?

if you were working from april to october 2022, then on UC / not working until april 2023, you'd have been paying tax from april to october on the expectation of being in work all year - you get 1/12 of the personal allowance each month or 1/52 each week (or whatever fraction depending on how often you get paid) across the whole year.

have they already sorted that out?



that's all very well if you can create a personal tax account - mum-tat is in a minor tizz about something, but can't create an account online, as she doesn't have a passport or driving licence to prove she exists, so i've suggested she writes to them.

I was wondering how you replied to me before i suggested the app in the next post then

I was posting the image for the phone number.

 

[AnnO'Neemus]

Is this tax or taxable pay? To owe £6k in tax you’d likely to be earning £40k+ and have paid no tax on that income

What tax code were you on while in employment? And were you paying tax each time you were paid?

Do you have any other form of income eg a work pension you are taking, self employment etc?

This sounds like you need to call HMRC to get to the bottom of it

First bold bit, yes, the rough back of an envelope style calculation I'd done in my head suggested that too, ie:

12k-ish personal allowance, so my income would have to have exceeded that for tax liability to kick in.

6k tax liability would equate to 20% of earnings, so my earnings as a basic rate tax payer (over and above 12k personal allowance) would have to be around 30k pre-tax earnings to incur 6k tax liability.

So 12k personal allowance + 30k pre-tax earnings would give an annual income of £42k.

And yet I've earned £7.5k to date, with projected £6k on top (for Jan, Feb, Mar salary), which will be total earnings this financial year of £13.5k.



As for your next bold bit about other income, I've had a little bit of lodger income in November/December from Christmas markets folk, but that is well under the £7.5k tax-free allowance under the Rent a Room scheme. (To help me pay higher winter energy bills.)

Rent a room in your home

Renting a room in your home out - Rent a Room Scheme, types of tenancy or licence, rent, bills, tax and ending a letting

www.gov.uk

Although your query asking about 'other income' has made me think about the pay I received in December, ie my salary from my current job, plus the holiday pay I was owed from my last job (which I left in September)...

So now I'm wondering if HMRC think I currently have both of those jobs, because taking account of me starting paid employment a quarter of the way through the tax year, then the combined salaries of those jobs... that would probably be in the ballpark of the pre-tax earnings amount they're reckoning I owe £6k ish tax on.

HMRC treating that one-off payment in December of accrued holiday pay I was owed from a job I finished in September as an indication of a second job that they're assuming I'm still doing is probably the most simple and logical explanation.

So yes, while I don't have any other taxable income, it appears that HMRC thinks I do, and now I think I know what they think.

Cluedo style answer: It was the taxman (or woman), that did it, in the tax office, with a calculator and a mistaken assumption.

Thank you!

 

[AnnO'Neemus]

Thanks all.

Re risk of scams: it wasn't a text or email, it was a brown envelope HMRC letter. But thank you for the reminder to be cautious, much appreciated in this day and age when scammers are quite clever, increasingly so, and catch lots of people out.

Re phoning them. I know that was the right answer. But I received the letter on a Saturday morning and panicked at the prospect of losing a big chunk of my pay cheque for the next three months and going forwards when I'm already on a relatively low salary. I'm not exactly struggling, I'm not at risk of losing the roof over my head or anything, but I have got monthly loan repayment plus some credit card debt that I need to service/pay off, which I racked up while out of work.

Logging on to my HMRC Gateway. If only it were that simple. I think I have three Gateways, all connected to the same email account.

One was set up when I opened one of those 'Help to Save' accounts. I think one was set up for a previous tax rebate. And I think another one was set up for NS&I account for a few premium bonds.

The problem was that I forgot the passwords, but when I tried to reset them, I also forgot which account was for what purpose. And it also doesn't help that when you ask for a new password/password reset, it just sends you a notification/link (can't remember) but it doesn't tell you which account it's the new password for, but I have three and never manage to get it right.

I've asked them to please delete them all and just give me one new account, but they can't/won't. It's a nightmare. So I have no way of doing anything online relating to HMRC because of their totally rubbish user-unfriendly system.

 

[AnnO'Neemus]

Does it have a breakdown on it? Any further info on calculation? Sounds like they've got an incorrect income figure from somewhere.

Yes, on reflection, I think that HMRC thinks that I'm still doing the job I left in September, because they finally paid me my accrued holiday pay in December. As my back of an envelope style sums suggests the ballpark figures would be about right, and it's the most simple and obvious explanation.

 

[A380]

First bold bit, yes, the rough back of an envelope style calculation I'd done in my head suggested that too, ie:

12k-ish personal allowance, so my income would have to have exceeded that for tax liability to kick in.

6k tax liability would equate to 20% of earnings, so my earnings as a basic rate tax payer (over and above 12k personal allowance) would have to be around 30k pre-tax earnings to incur 6k tax liability.

So 12k personal allowance + 30k pre-tax earnings would give an annual income of £42k.

And yet I've earned £7.5k to date, with projected £6k on top (for Jan, Feb, Mar salary), which will be total earnings this financial year of £13.5k.



As for your next bold bit about other income, I've had a little bit of lodger income in November/December from Christmas markets folk, but that is well under the £7.5k tax-free allowance under the Rent a Room scheme. (To help me pay higher winter energy bills.)

Rent a room in your home

Renting a room in your home out - Rent a Room Scheme, types of tenancy or licence, rent, bills, tax and ending a letting

www.gov.uk

Although your query asking about 'other income' has made me think about the pay I received in December, ie my salary from my current job, plus the holiday pay I was owed from my last job (which I left in September)...

So now I'm wondering if HMRC think I currently have both of those jobs, because taking account of me starting paid employment a quarter of the way through the tax year, then the combined salaries of those jobs... that would probably be in the ballpark of the pre-tax earnings amount they're reckoning I owe £6k ish tax on.

HMRC treating that one-off payment in December of accrued holiday pay I was owed from a job I finished in September as an indication of a second job that they're assuming I'm still doing is probably the most simple and logical explanation.

So yes, while I don't have any other taxable income, it appears that HMRC thinks I do, and now I think I know what they think.

Cluedo style answer: It was the taxman (or woman), that did it, in the tax office, with a calculator and a mistaken assumption.

Thank you!

I’d ring them. I had a similar thing when I went on my career break. The letter will be automatically generated. It could well be a projection based on what you paid last year and no human has looked and thought, ‘ that’s odd’.

( ended up with a month where my total tax and NI bill was greater than my total earnings) because I cut my income by about 70%. TBF they sorted it out after one quick phone call.)

 

[AnnO'Neemus]

Do you have all your P45s from the previous employers?

Don’t panic. Collect what info you have, then call them. They’ll help you get to the bottom of it.

Yes, but it's a Saturday, so I can't. But I panicked at the thought/prospect of losing a relatively big chunk of my pay over the next few months and wondered if anyone might have a more immediate explanation.

 

[StoneRoad]

Hope you can get this sorted out quickly AnnO'Neemus - ring as early as you can, would be my advice.

(Do so miss those days when you could rock up to a tax office and see someone face-to-face if there was a need for it)

 

[AnnO'Neemus]

Does it say it's for work you've done this tax year, ie. since April 2023? I'd have thought it would be for 2022-23, and possibly before that too?

Nah, it didn't mention any previous tax years, just this one.

Referred to:

Less Adjustment for estimated tax you owe (this year)

Estimated tax you owe (this year)

 

[Puddy_Tat]

(Do so miss those days when you could rock up to a tax office and see someone face-to-face if there was a need for it)

of course david cameron promised no cuts to front-line services back in 2010...

So yes, while I don't have any other taxable income, it appears that HMRC thinks I do, and now I think I know what they think.

that assumes they know what they think, which i think may be over-optimistic

 

[Mrs Miggins]

Definitely sounds like some sort of cock up on their part. You KNOW it can't be right because you know what you've earned.

They do make errors and in my experience, they are actually really good at sorting things like this out. Just call them. Call at 9am when they open and you should get through fairly quick. As soon as a human looks at this, they will see its wrong.

 

[littlebabyjesus]

Yeah, I've only had to deal with HMRC once and I was pleasantly surprised by how helpful they were.

 

[littlebabyjesus]

Nah, it didn't mention any previous tax years, just this one.

Referred to:

Less Adjustment for estimated tax you owe (this year)

Estimated tax you owe (this year)

That word 'estimated' is key here, no? As someone said above, this has probably been produced without direct human involvement. My bet is that it will be reasonably easy to sort out.

 

[DaveCinzano]

Yeah, I've only had to deal with HMRC once and I was pleasantly surprised by how helpful they were.

Yes, if they feel your figures are correct and make sense, and that for whatever reason they have made incorrect assumptions at their end which generated different figures, then (1) they (IME) tend to be efficient and helpful and get it sorted quickly. Because, you know, you don't owe them.

If, however, the figures you supply are correct, and those are the figures they are working from, but you just can't afford to pay them (e.g. because you didn't put aside the money when it came in), then (2) they can be very Goodfellas-style FUCK YOU! PAY ME MY MONEY NOW! HAVE A FINE! HAVE A LATE FEE! HAVE ANOTHER FINE YA FUCKEN MOOK! Because you do owe them. Thankfully this is just not the case for you here, so things should default to the sunny HMRC response (1) pretty promptly. So enjoy your weekend