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Tony Tax
Tony Tax, Tax Consultant
Category: UK Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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hi, I have just had a letter from H&M Revenue and Customs

Resolved Question:

hi,

I have just had a letter from H&M Revenue and Customs saying my new tax code is K84. They also show some working which looks to me that i owe them £843? I have a PDF of the letter which i'm happy to send to you. I just need advice on what this means and what i should do.

thanks in advance
Mike
Submitted: 4 years ago.
Category: UK Tax
Expert:  Tony Tax replied 4 years ago.
Unfortunately, you cannot send me a pdf of the letter.

The tax office appear to be saying that you owe them tax either for the current tax year or an earlier tax year.

Can you tell me what is in your tax code, what you do for a living, how long you have been employed, whether you have any taxable employment benefits such as a company car or private medical cover paid by your employer and any other income such as rental income or self-employment income.

These underpayments do not happen for no reason so there must be something in your personal circumstances that has given rise to it. Please think about your circumstances and let me know of anything that might be relevant.
Customer: replied 4 years ago.
Hi

The letter says the following:

"Your new tax code for year 6 April 2009 to 5 April 2010 is K84, which replaces 647L"

Your personal allowance +£6475
   employer benefits    -£5233
   car benefit          -£2100
   tax due on           -£858

i've been employed since i was 16 but have been in my current job for 5-6years (now 24). I have a company car but no health benefits and i claim expenses but only things which i use for work such as hotel rooms, etc. I have no other income and i work for a nightclub / bar company.

thanks again
Expert:  Tony Tax replied 4 years ago.
I cannot see where they say you owe £843. There would be a deduction for it from your personal allowance. You have a car benefit of £2,100. What does the figure of £5,233 represent?

Assuming the tax code is correct, it means that your taxable benefits exceed your personal allowance by £858. This additional "income" is added to your salary as if it was paid in cash and taxed accordingly.

If you still think that the tax office are saying you owe £843 and there is nothing in the code that suggests that then you should call them and ask them why the underpayment has occurred. If there is one, I suspect that neither you nor your employer told the tax office as soon as you were given a company car, thereby accruing an underpayment for the period it was not in your tax code.
Expert:  Tony Tax replied 4 years ago.
Just to clarify.

As the apparent tax underpayment of £843 is not in your current tax coding it will be probably be collected through your 2010/11 tax coding from April 2010. You should still call the tax office and ask them which tax year the underpayment is for.
Customer: replied 4 years ago.
hi Tony, thanks again for your reply. I just assumed that since the bottom figure is a minus number that i owe them money, is this incorrect? I don't know what the 5233 is or where it has come from. I don't really understand any of this and have never really ever paid much attention to tax codes. Would you recommend going to see a tax accountant, if so, do you recommend anyone online? I know i got the car midway through the period they state in the letter and they would have only been told about my car as part of some form the HR department sent them recently showing the car and its value. thanks
Expert:  Tony Tax replied 4 years ago.
What period does the letter say the underpayment is for?

The £5,233 is probably the total of expenses you were reimbursed by your employer in 2008/09. Unless the code is changed you will pay tax on business expenses.

You need to get a copy of the P11D submitted to the tax office by your employer or their accountants then write a letter to the tax office saying that the expenses you received in 2008/09 that were shown on your P11D were incurred wholly, exclusively and necessarily in the performance of your duties as an employee of the company you work for. Hopefully, the tax office will then remove the £5,233 from the tax code. You could ask your employer's accountants to draft a letter for you.

As you will wait some time for the tax office to deal with a letter you should call the tax office and ask them to remove the £5,233 figure from your 2009/10 tax code as they are business expenses and not taxable. They should do it while you are on the phone to them and you will get a new code within a week or so.
Tony Tax, Tax Consultant
Category: UK Tax
Satisfied Customers: 14088
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
Tony Tax and 2 other UK Tax Specialists are ready to help you
Customer: replied 4 years ago.
thanks Tony
Expert:  Tony Tax replied 4 years ago.
You could go to see an accountant but if your employer has one get them to help you out. I do the same for my clients' employees who have a problem.

You need to call the tax office asap as the tax code you have is going to hurt you financially until it's changed.

If you had the car for a period before it was coded then you will have an underpayment which the tax people will collect from April 2010 over twelve months.

Do not click accept. You don't need to pay again!

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