You see Income Tax deducted from every payslip. Then your Self Assessment tax return is prepared and there is another amount to pay. It is reasonable to ask: what was all the tax coming out of your wages for?
Your personal tax return brings together your income and tax for the year. The tax already deducted from your wages should be taken into account, so you are not simply being charged twice on the same earnings. But those deductions may not cover everything you owe.
Sometimes the difference is straightforward, such as tax on rental income alongside your salary. In other cases, we need to check your tax code, work benefits and other income to understand what has happened.
An unexpected bill is not automatically wrong. But you should be able to understand where it comes from.
Why there may still be tax to pay
You have income outside your employment
Your employer deducts tax from your pay. That does not necessarily cover the tax on rent, freelance work, dividends or savings interest you receive elsewhere.
Some of this income may be covered by an allowance, or HMRC may collect tax on it by changing your tax code. Where it has not been covered, there can be more to pay through Self Assessment. Being employed does not give you a separate set of Income Tax bands for your other earnings.
For someone who has recently started letting a property or working for themselves alongside a job, this may be the first time their payslip has not dealt with most of their tax.
Your income has gone above £100,000
Your salary is only part of the picture. Bonuses, taxable benefits, employee share awards and other income can all affect the amount of tax you owe.
Your tax-free Personal Allowance starts to reduce once your adjusted net income exceeds £100,000. This broadly means your total taxable income after certain deductions, including qualifying pension contributions and Gift Aid donations. For every £2 above that threshold, you lose £1 of Personal Allowance.
Your employer may have deducted tax from a bonus, but that does not necessarily mean enough tax has been collected overall. If your tax code still allowed more tax-free income than you were entitled to, the difference can become apparent when the whole year is calculated.
Your tax code did not match your circumstances
Your employer uses your tax code to calculate deductions. HMRC normally updates it using information from employers and pension providers, but incorrect or missing information can lead to the wrong amount being collected.
Changing jobs, having more than one job or receiving income from a pension as well as employment can make this harder to follow. It is worth checking that HMRC has the correct employers and a sensible estimate of your income for the year.
A tax code is an instruction for collecting tax during the year. It is not a guarantee that nothing further will be due.
You receive taxable benefits from work
Private medical insurance and a company car can create a tax bill even though you have not received extra money in your bank account.
Depending on how your employer reports the benefit, tax may be collected directly through payroll or through an adjustment to your tax code. If the benefit or its value has changed, the amount collected may need correcting.
Your P11D, or the benefits statement your employer provides, helps show what needs to be included in your personal tax return. The check is both whether the benefit has been reported and whether it has already been taxed, so it is not counted twice.
Has the tax you have already paid been included?
Your personal tax return should show both the pay you earned and the Income Tax deducted from your wages during that tax year. These figures need to be checked against your P60 or P45 and any other relevant employment records.
If your tax code has also been collecting tax you owed from an earlier year, that needs checking separately. Otherwise, it can be difficult to tell how much of the tax coming out of your wages relates to the year you are looking at.
For a simple illustration, suppose the correct Income Tax for the year is £12,000 and £10,000 has already been collected through your wages. The remaining Income Tax is £2,000, not another £12,000. This example leaves aside other charges, earlier-year adjustments and payments you have made directly to HMRC.
Once the calculation has allowed for your PAYE deductions, you should not subtract them again from the remaining amount.
Why can the January payment be larger than expected?
The tax calculated for one year and the balance shown on your HMRC account are not always the same thing. Your account also records payments you have made and can include outstanding amounts from earlier years or interest.
You may also need to make payments on account. These are advance payments towards the following year’s bill. When they apply, January can bring both the remaining tax for the year just ended and the first payment towards the next one.
They do not apply to everyone. In particular, many employees have enough of their tax collected through PAYE to fall outside the rules.
Other charges can also form part of a Self Assessment bill. For example, the High Income Child Benefit Charge may require some or all of the Child Benefit received by you or your partner to be repaid. That is different from paying Income Tax twice on your salary.
Before treating the whole amount as extra tax on your wages, check what it is made up of.
Have you claimed the tax relief you are entitled to?
Checking a bill is not only about looking for income that has not been taxed. It also means checking whether pension contributions, Gift Aid donations or other tax relief could reduce what you owe.
Pension contributions are a good example. With some pensions, the provider adds basic-rate tax relief, but you may need to claim further relief if you pay tax at a higher rate. With other workplace pensions, the relief has already been given through your pay. The same contribution should not be claimed twice.
Gift Aid donations can also reduce the tax payable by higher-rate taxpayers. Giving your accountant the pension and donation details helps them check that your personal tax return includes the relief you are entitled to.
That does not mean every unexpected bill can be reduced. It means checking both sides of the calculation.
Does owing extra tax always mean you need a personal tax return?
No. HMRC can also deal with an employee’s underpaid tax through a P800 tax calculation or a Simple Assessment. These are different from a Self Assessment tax return, and the next steps depend on which document you have received.
A straightforward tax-code problem may be resolved by correcting HMRC’s information. Other income or more complicated circumstances may mean a personal tax return is needed.
If HMRC has asked you to complete a Self Assessment tax return, you still need to do so unless HMRC confirms it is no longer required. Having tax deducted from your wages does not cancel that request.
For the 2025/26 tax year, the usual deadline for sending your personal tax return online and paying the remaining tax is 31 January 2027. Getting a bill checked does not, by itself, extend those deadlines.
How Thames Williams can help
You should be able to understand your tax bill without having to become an accountant.
At Thames Williams, we can prepare your Self Assessment tax return or review a personal tax return or unexpected tax bill you already have.
We check your pay, other income, benefits and any tax relief you can claim. We also check that the tax already taken from your wages has been included correctly. We then explain why there is more to pay and whether any of the amount is an advance payment towards next year’s bill.
To get started, we would usually ask for:
- Your P60 or P45, relevant payslips and any P11D or benefits statement.
- The tax calculation or HMRC letter you are querying, together with details of payments already made.
- Records of other income, pension contributions and Gift Aid donations relevant to that year.
You do not need to identify an error before contacting us. Tell us what you have received and which part does not make sense.
Sometimes the calculation is correct and the help you need is a clear explanation. Where something needs correcting, we will explain what work is required. We will agree any work on earlier years, corrections to a personal tax return or further contact with HMRC separately, including the fees, before we begin.
Have a tax bill you were not expecting?
Tell us which tax year the bill relates to, whether your personal tax return has already been sent to HMRC and any deadline shown on the letter or statement.
We will explain how we can help, what the work would involve and how much it would cost.
Talk to Thames Williams about your personal tax return
This article provides general guidance. The tax you owe and how it should be reported depend on your circumstances.
