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Posted Wed, 13 Dec 2023 15:01:58 GMT by
Hello, Have been PAYE with the same employer since 2018 up until redundancy in march 23. Came to submit my self assessment yesterday for 22/23 and the amount owing is double what was expected at ~£4K. Looking into it there is a charge of ~£2300 for: "plus Underpaid tax for earlier years in your tax code for 2022-23" This amount correlates exactly to the balancing payment for year 20/21 which I opted to repay via tax coding, and was informed (HMRC statement dated Dec 21) would be included in my PAYE coding for 22/23, leaving me with nil to pay. I was then in full time employment with the same employer up until march 23. My PAYE code was then dropped from 905TM1 to 557L for 22/23, in theory reclaiming some of the outstanding amount from 20/21. I then can't understand how the full amount from 20/21 remains outstanding - I called the service centre, to have a very rushed explanation put across, that didn't make sense, and then the phone was put down on me. Please assist. Thanks.
Posted Tue, 19 Dec 2023 11:33:03 GMT by HMRC Admin 5

If you opted to pay your 20/21 balancing amount in your 22/23 code, this amount needs to be included in your 22/23 tax calculation.
This ensures the deduction that was made to your 22/23 tax free allowances to collect the balancing payment through your wage is also reflected in your 22/23 calcualtion.
If the 20/21 balancing payment deduction in your 22/23 code is NOT included in your 22/23 calculation, you will be incorrectly refunded the 20/21 balancing amount you repaid through your wage, as the corresponding deduction in you 22/23 tax-free allowances will not be represented.

Thank you

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