How do I settle a PAYE underpayment?

dennyk

After filing my eForm 12 to report my US dividends, I've received a P21 balancing statement showing an underpayment (due to the dividends). However, there is no indication of how to go about paying the tax owed. In the "Treatment of Result" box on the P21, it just says:

"Collected by reducing your credits in future tax years: 2018. All future refunds will be automatically offset against this underpayment until it is fully collected."

Does that mean that they're just going to reduce my 2018 tax credits by the amount in question and that I shouldn't send them a payment for it? (The amount owed is less than my standard credits.) Is there a penalty associated with that method of collection (e.g. interest or fines for late payment), or is that just the normal way it's done? Will I need to notify my employer or change anything on my 2018 tax credit settings myself, or will Revenue adjust them for me?

relax carry on

dennyk wrote: »

After filing my eForm 12 to report my US dividends, I've received a P21 balancing statement showing an underpayment (due to the dividends). However, there is no indication of how to go about paying the tax owed. In the "Treatment of Result" box on the P21, it just says:

"Collected by reducing your credits in future tax years: 2018. All future refunds will be automatically offset against this underpayment until it is fully collected."

Does that mean that they're just going to reduce my 2018 tax credits by the amount in question and that I shouldn't send them a payment for it? (The amount owed is less than my standard credits.) Is there a penalty associated with that method of collection (e.g. interest or fines for late payment), or is that just the normal way it's done? Will I need to notify my employer or change anything on my 2018 tax credit settings myself, or will Revenue adjust them for me?

It's automatic. You pay the tax due by paying more tax on your wages in 2018. It's pretty much standard for PAYE earners with small additional sources of income. No interest applicable here.

gerrybbadd

There won't be penalties or interest either.

Your tax credits will be reduced by the amount of underpayment next year, meaning you will pay some extra tax each pay period, until the end of the year. the underpayment is then fully collected this way.

Your employer won't be notified you had an underpayment either. They will just be informed of your reduced tax credits.

thesimpsons

if you would prefer to pay in a lump sum and not have your 2018 credits reduced, let Revenue know and it can be arranged.

dennyk

thesimpsons wrote: »

if you would prefer to pay in a lump sum and not have your 2018 credits reduced, let Revenue know and it can be arranged.

Hey, if the government wants to give me an interest-free loan for a year or two, I ain't gonna argue. I'm just used to it being the other way around... :pac: