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Posted Wed, 11 May 2022 07:13:03 GMT by fryderykchopin
In the 2020-21 tax year I incurred in some work expenses because of having to work from home, which I included in my 2020-21 tax return. Immediately after submitting my tax return HMRC changed my tax code from 1257L to 1350L, increasing my personal allowance by £930, which is the same amount as my work expenses that year. I guess this change of tax code is done assuming that work expenses will be the same the next year. However, in 2021-22 my work expenses have been lower than £930. I have included the actual amount of expenses for 2021-22 in my draft return. I was expecting the final calculation to take into account the difference between my actual expenses and the tax code that has been applied, so the net difference is the amount of tax relief I would get this time. However, the calculation just deducts last year's work expenses from last year's gross salary and uses the standard 1257L tax code again, without taking into account the fact I have had a tax code of 1350L since I submitted my tax return last year. This means that I have been receiving tax relief equivalent to £930 per year since I submitted my tax return last year and, on top of that, the system is calculating an additional tax relief equal to the amount of expenses I have had this year, so I'm getting double tax relief on my work expenses. It would have been much easier if my tax code hadn't been changed, then the amount of tax relief and tax paid would have been correct every year. I'm not sure what I should do now for the 2021-22 tax return, any help would be appreciated.
Posted Thu, 12 May 2022 14:51:20 GMT by HMRC Admin 2

When completing the tax return, the calculation is based on everything you put on the return and it does not take into account what your tax code was during the year.

The calculation would add the amount of allowances you claimed onto the Personal Allowance to work out your tax free amount, calculate the amount of tax due and set this against the tax that you had already paid.

Thank you.

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