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Underpayment Tax question

I started a new job at the beginning of the last tax year and was placed on an emergency tax code of 22% by my employer.

When I completed my self assessment tax return a couple months ago it became apparent that I had be underpaying taxes; as I fall into the high rate tax bracket. When I contacted Inland Revenue they initially told me not to worry as they could give me a special tax code for this current year to repay the underpayment.

When the final calculations came through I was told that I've underpaid around 2,500 when I contacted Inland to be given a new Tax Code they told me that I owe too much and have to pay the full amount, however if I had owed 2,000 then I'd be able to repay monthly with a tax code.

This seems pretty unfair as I'll now have to repay last years taxes on already taxed income. Has anyone else been in this situation? Or can offer advice on how best to deal with Inland?

Thanks

L
Reply to
Louise
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How about an interest free loan from your employer? It seems the error may be theirs, as Emergency Code for 2003-04 was 461L Month 1, not BR (all at

22%).

Or paying the IR 500, and Code out the balance (of under 2000)?

Reply to
Doug Ramage

| How about an interest free loan from your employer? It seems the error may | be theirs, as Emergency Code for 2003-04 was 461L Month 1, not BR (all at | 22%). | | Or paying the IR 500, and Code out the balance (of under 2000)? | --

I was on the BR1 tax code.

I've suggested to inland that I pay 500 upfront and then pay the remaining balance over the year, however they refused. They seemed fairy strict on the matter. Surely this situation happens all the time? Is there any explanation for Inlands inflexibility?

Reply to
Louise

Only that there has to be a cut-off - obviously the IR do not want to give away too many interest free loans. Any amount just over to that cut-off is going to be "unfair".

How about a 0% credit card balance transfer?

Reply to
Doug Ramage

| Only that there has to be a cut-off - obviously the IR do not want to give | away too many interest free loans. Any amount just over to that cut-off is | going to be "unfair". | | How about a 0% credit card balance transfer? | -- | Doug Ramage | | [watch spam trap] |

I suppose the issue I have is not so much in the repayment itself, but rather not being able use pre-taxed income for the payback.

Reply to
Louise

"Pre-taxed Income"? I am not sure I understand.

Are you wanting some form of tax relief on the additional 2500 tax payment?

Reply to
Doug Ramage

| "Pre-taxed Income"? I am not sure I understand. | | Are you wanting some form of tax relief on the additional 2500 tax payment? | -- | Doug Ramage |

I was under the impression that if I was permitted to repay last years tax underpayment via a tax code this would work out *cheaper* than if I were to pay it in full or monthly installments, since Id be paying with pre-tax income.

Reply to
Louise

No, it would just be an interest free loan. Your PAYE Code would be decreased by the grossed up amount of the underpayment.

Doug Ramage

Reply to
Doug Ramage

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