Tax collected through PAYE

JodieR Registered Posts: 1,002 Beyond epic contributor 🧙‍♂️
My client had emplyment income in 08/09 of approx £30k and then self employment income of about £10k. Her tax liability was £2300. In 2007/08 her profits from self emplyment were higher so she'd already made a payment on account of £1500 in Jan 09, so I advised her to pay £800 in July 09, which she duly did. In fact she paid it on 18th July to be precise. She's now received a statement and it shows that on the 31 July the £800 has been included in her tax code for 2010/11 so there's now an £800 credit on her account. Is this right? I thought that the rules were that if your tax liability was less than £2k after taking into account tax deducted at source then you could collect it through your tax code. I never thought that payments on account were classed as 'deducted at source'. Have the rules changed recently or have I always misunderstood them?


  • Anne Boleyn
    Anne Boleyn Registered Posts: 196 Dedicated contributor 🦉

    Hi Jodie

    Did you want the tax collected through the PAYE code or paid by cheque/DD? I don't know if you can mix and match the two ie 1 poa then the rest through code. Hopefully more knowledgeable readers will let you know.

  • deanshepherd
    deanshepherd Registered Posts: 1,809 Beyond epic contributor 🧙‍♂️
    Never seen that one before!

    Sounds like a Revenue error to me.

    I'd be inclined to ask the client how they want to proceed but encourage them get it removed from the code. It will only come back to bite in a couple of years time.
  • JodieR
    JodieR Registered Posts: 1,002 Beyond epic contributor 🧙‍♂️
    Thanks Dean, I had already written to her and said explained the pros & cons of keeping it in the tax code. She's quite an 'in-your-face' kind of person though & I'm expecting a call from her accusing me of getting it wrong and making her pay money she didn't need to so it's nice that you've confirmed what I was thinking ie that HMRC got it wrong rather than me. :)
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