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Posted Wed, 19 Jul 2023 19:07:02 GMT by Steve 75
Hi, I noticed my tax free allowance was very low for this tax year. When I viewed the calculation it had the following deduction items: 1. You underpaid £1,506 tax in a previous tax year. To collect this we have reduced your Personal Allowance by £3,766. This means that you will pay more tax until 5 April 2024, so that we can collect the £1,506 owed. 2. Child Benefit £5,187 Re Item 1: Why is the personal allowance reduction £3766 if I owe £1506 in tax? Re Item 2: I receive child benefit for 2 children. The amount of child benefit is ~£1800/yr. Why is there a deduction of £5187? Thanks in advance for your help.
Posted Thu, 20 Jul 2023 18:49:18 GMT by Bella Boo
Not HMRC but that is how much you will pay tax on, not how much you will pay in tax. Child benefit for 2 children is 39.90 per week x 52 weeks = 2074.80. 5187 x 40% = 2074.80 3766 x 40% = 1506.40 Hope that's easy enough to understand.
Posted Fri, 21 Jul 2023 15:26:59 GMT by Steve 75
Thank you very much! That makes sense now.
Posted Thu, 27 Jul 2023 05:58:35 GMT by HMRC Admin 25
Hi Stephen Dickinson,
You pay back at your highest rate of tax on the deductions.
If you are higher rate you would pay 40% of the figure in the code.
If the child benefit amount is too high you will need to contact our helpline to adjust the figure.
Income Tax: general enquiries
Thank you. 

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