My client had an underpayment in a previous year and decided to get it collected through his tax code for 2017-18. So from my understanding that has been collected and so doesn't need to be paid again. In the tax return, it says it needs to be put into box 7 and the calculation shows that it has to be paid again. I queried it with HMRC and received a letter saying yes it has been paid and our calculations are correct (with the u/p added) so now I'm really confused. I don't really understand tax codes as it is so any help on this would be appreciated. Does it need to be paid again in the tax return? If so why?
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If the tax code has been adjusted and the tax paid as a result, then your calculation ought to show that, in their PAYE employment, they have overpaid tax by the same amount as the adjustment to the code, as your calculation will use the actual personal allowance and not the adjusted one.
The adjustment and the overpaid tax cancel out and nothing extra is paid.
Sorry, but are you sure you should be acting for a client on tax affairs and not understanding something as basic as this?
Sorry, but are you sure you should be acting for a client on tax affairs and not understanding something as basic as this?
Now now...
It's often a long way down, from the steps of the ivory tower.
A little humility wouldn't go amiss.
Perhaps you added it to the wrong box.
Tax paid for earlier years included in this year's tax code.
As apposed to, underpaid tax added to next years.