Underpaid tax for earlier years

I was hoping someone can tell me why the tax calculation adds underpaid taxes for earlier years. The Tax Code Notice states (amounts have been altered): "We previously told you that you owe £200 tax from an earlier tax year. We have therefore included as adjustment to reduce your tax-free allowance by $500 so we can collect the £200 tax on equal installments. To make sure you pay the £200 by 5 April 2023, we will increase the amount of tax deducted from your wage, salary or pension." This statement, at least to me, implies that I have paid my £200 during the curse of the 2022-23 tax year. But the Tax calculation for 2022-23 on my Self Assessment is then including the £200 to the taxes I owe plus Underpaid tax for earlier years in your tax code for 2022-23 £200.00 Am I paying this £200 twice? Thank you for any clarification you can provide.

It sounds correct - you paid the underpaid tax via PAYE during the year, but the fact that you had that underpaid tax liability still needs to be part of your Self Assessment calculation as otherwise the SA calculation would attempt to incorrectly refund the underpaid tax back to you. Think of it this way: PAYE / tax codes are a tool to spread out paying roughly the right amount of tax over the year. At the end of the year, the Self Assessment looks back over what actually happened in the entire year, and fixes up the amount of tax in cases where PAYE didn't cover all the details. The Self Assessment should include the fact you had underpaid tax to pay... But should also include the "tax paid" figure from your P60 or P45, giving you credit for what you have already paid, so that you don't pay twice.

Thank you for the explination.

Hi Greg B,
If an underpayment of £200 from an earlier tax year was collected in your 2022/23 tax code then this is included on your tax return as this is part of the tax deducted at source.
You are not paying it twice as you get credit for the tax paid at source on your calculation. 
Thank you.