strange change of tax code

Burlesque_Babe · 19 November 2009 at 6:54PM

bit

but am not a tax expert in any way.

My situation: Have an employer who I get taxed in the 'normal' way through PAYE. Also do a small amount of self employed work. Do my tax return as soon as the notifications go out so it is out of the way.

For my 07-08 tax return, I had £787 tax to pay. I elected to have it taken from my salaried job and got a notification of a code of 253L and off we went for the year, with them taking (I thought) around £70 a month extra (through my rough calculations)

I got a letter today saying that for 09-10 (ie now, so a retrospective change) my code was changing from 253L to 647L using the information in my tax return.

I have called them to say I thought I was paying enough rather than too much- ie the £787 split over the year, why would they change my code and in effect put me in a much better position? I was told that whoever had reviewed it hadn't been clear on the notes on my file :rolleyes: but it was definitely regarding the 07-08 tax return and I would be due some kind of tax refund

She has requested them to send me a letter of explanation but wondered if anyone could shed any light on it (tax numpty here

)

To make matters a bit more fuzzy, I can't simply look at last years tax amount each month and think - yes I have been paying more than approx £70 a month/no I haven't because my salary changes every month and also I didn't start in my salaried job until the end of the last tax year.

Also - my salaried post is part time from April to August and has recently gone up to full time if that has any bearing on anything.

If anyone is still following this, I :T you

It was just any thoughts really - I don't want to get a refund and then they have a change of mind and they want it all back again :rolleyes:

If it helps, I only have £193 tax to pay in the 09-10 year through PAYE for last year's self employed work, my tax return was done in late April or so.

Cheers in advance.

mcguireuk · 19 November 2009 at 7:32PM

This would depend on what info you entered on your most recent tax return... How long was the 253L code in operation for? basically the way a tax code works is that it splits the tax due across the year into either 12 (if paid monthly) or 52 (weekly) etc so if the code was in operation for twelve months then all the tax was paid and therefore your new code of 647L for the 09/10 year is correct.

Rolo_Tomasi · 19 November 2009 at 7:54PM

As you rightly point out, something has gone wrong here and no matter whether it was your fault or the Revenues, unless it gets corrected you will have a tax bill to pay. Assuming you are a 20% tax payer then if you owed £787 in tax for 07-08 and asked for it to be collected through your tax code then you 2009-10 code would be reduced by £3935 (£3935 x 20% = £787). If you have no benefits or expenses in your code then this would make you 2009-10 tax code 254L (6475 - 3935) which effectively means that you are paying the tax owed for 2007-08 at £65 per month.

This appears to be what has happened so far this year and seems to be correct.

Any information you put on your 2008-09 tax return should not effect your 2009-10 tax code. The tax owed for 2008-09 will be collected by adjusting your 2010-11 code.

With your 2009-10 code reverting to 647L you are not paying the tax due for 2007-08 and so this will now sit on your self assessment account until it is paid.

You need to contact your tax office again and ask why an actual underpayment of tax for the 2007-08 tax year is no longer in your tax code. The only thing that I can think of that you might have done is included the £787 tax due for previous years on your 2008-09 tax return.

Burlesque_Babe · 19 November 2009 at 7:59PM

I got a 09-10 PAYE coding notice on 11 Jan 09. It said the code for 09-10 would be 253L

personal allowance ..................6475
collect unpaid tax £787.98........-3939

tax free amount of...................... 2536

We turn £2536 into tax code 253L

..........you can receive about £211 a month before xxx takes tax off you.

I get a small amount of WTC (£108 a month) to throw in the calculation melting pot.

Burlesque_Babe · 19 November 2009 at 8:05PM

Rolo_Tomasi wrote: »

As you rightly point out, something has gone wrong here and no matter whether it was your fault or the Revenues, unless it gets corrected you will have a tax bill to pay. Assuming you are a 20% tax payer then if you owed £787 in tax for 07-08 and asked for it to be collected through your tax code then you 2009-10 code would be reduced by £3935 (£3935 x 20% = £787). If you have no benefits or expenses in your code then this would make you 2009-10 tax code 254L (6475 - 3935) which effectively means that you are paying the tax owed for 2007-08 at £65 per month.

This appears to be what has happened so far this year and seems to be correct.

this is just how it is (apart from having a bit of WTC benefits)

Rolo_Tamasi wrote:

Any information you put on your 2008-09 tax return should not effect your 2009-10 tax code. The tax owed for 2008-09 will be collected by adjusting your 2010-11 code.

again, this is what I thought

Rolo_Tamasi wrote:

With your 2009-10 code reverting to 647L you are not paying the tax due for 2007-08 and so this will now sit on your self assessment account until it is paid.

hmmmm:rolleyes: I tried to explain to the lady on the phone that if I got a refund I didn't want to then end up at some point with a bill but she didn't seem to think I would :rolleyes:

Rolo_Tamasi wrote:

You need to contact your tax office again and ask why an actual underpayment of tax for the 2007-08 tax year is no longer in your tax code. The only thing that I can think of that you might have done is included the £787 tax due for previous years on your 2008-09 tax return.

thankyou - I feel that I was correct in my general thinking - phew! I will see what the letter says they are sending me and then try to tell them they are wrong :rotfl:

I don't think I've included the £787 on my tax return - in fact I'm pretty sure I haven't as I did it electronically and it said I would have £193 to pay and when I mentioned this she said she could see that this was due to be collected monthly /12 from next April.

mcguireuk · 19 November 2009 at 8:06PM

From what you have just added it is really worth calling the tax office. It way well be that they have collected part of this through the tax credits system. Reducing the amount you receive to collect what is owed.

Burlesque_Babe · 19 November 2009 at 8:17PM

couple of examples of my salary this year

April (part time) taxable pay: 972.98 tax paid: £152

October (full time) taxable pay: 1657.84 tax paid: 289.40

Tarasam · 19 November 2009 at 8:29PM

i'm aware of some records where the new system isnt including prev underpayments (or SA paymts) in the current year code, if I were you i'd ring again and get a second opinion and a better explanation.

Burlesque_Babe · 20 November 2009 at 8:38AM

I have to say jimmo, I did also run that scenario through my mind - if they do give me it back I am going to transfer it all to a savings account and then leave it there. Tax stuff isn't an area I feel comfortable with, I know to them it's a pittance but I like to feel I'm paying what I need to and when so I don't get a nasty surprise when I'm not in a position to be able to easily pay it back.

mrkbrrws · 20 November 2009 at 9:14AM

The underpayment from 2007/08 may have been lost when HMRC moved to their new PAYE computer system, see http://www.hmrc.gov.uk/agents/nps.htm#13.

Tarasam · 20 November 2009 at 5:17PM

Burlesque_Babe wrote: »

I have to say jimmo, I did also run that scenario through my mind - if they do give me it back I am going to transfer it all to a savings account and then leave it there. Tax stuff isn't an area I feel comfortable with, I know to them it's a pittance but I like to feel I'm paying what I need to and when so I don't get a nasty surprise when I'm not in a position to be able to easily pay it back.

To the advisors you're speaking to on the phone its not a pittance at all, believe it or not we're quite poorly paid and do sympathise with the majority of tax payers who end up with an underpaymt, but unfortunately we dont make the rules we only have to impose them.

Only you can decide how to proceed, personally i'd be checking it.

strange change of tax code

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