Tax-free amount calculation

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.

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.

Thank you very much! That makes sense now.

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.