Mid year change of tax code
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sirbobbyroson
Posts: 1 Newbie
in Cutting tax
HMRC just sent me a letter saying my tax code is changing from 1150L to K77 X, the are saying I owe £916.00 this year (April 2017 to April 2018) and this new code will spread the amount between now and then. My question is that I don't understand why a) it's changed, I have a salary sacrifice car and assume they've seen that on my P11D but still £916 in 3 months? b) does this mean I will be paying the £916 + new tax amount? It's all very confusing, just seeing if anyone on here knows, the letter is extremely unclear and confusing haha???
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Tax code 1150L is almost certain to mean it wasn't taking into account your company car.
If the car benefit charge is large i.e. high value car or poor c02 emissions then the tax due could be quite a bit, especially if you're a 40% payer.
If you were on a 1100L tax code last year then you're likely to get the bill for last years tax shortly but the tax owed for last year wouldn't normally start being taken until next April (spread over 12 months 6 April 2018 to 5 April 2019).
Do you know why your employer didn't notify HMRC you had a company car when you first got it? Doesn't change what you owe but would have maybe spread it out a bit more.0 -
sirbobbyroson wrote: »HMRC just sent me a letter saying my tax code is changing from 1150L to K77 X, the are saying I owe £916.00 this year (April 2017 to April 2018) and this new code will spread the amount between now and then. My question is that I don't understand why a) it's changed, I have a salary sacrifice car and assume they've seen that on my P11D but still £916 in 3 months? b) does this mean I will be paying the £916 + new tax amount? It's all very confusing, just seeing if anyone on here knows, the letter is extremely unclear and confusing haha???
With regard to b) - unless things have changed recently the answer would be No! The £916 is the potential underpayment for this year to date. This will not be collected over this tax year but in a future tax year. At least this is how it used to play out!0 -
[quote=[Deleted User];72868625]With regard to b) - unless things have changed recently the answer would be No! The £916 is the potential underpayment for this year to date. This will not be collected over this tax year but in a future tax year. At least this is how it used to play out![/QUOTE]
Yep, very recently! From July 2 they are adjusting the tax code immediately that they are aware of a potential underpayment in the tax year. I think HMRC have made employers aware of it (as they will get more employee queries) but not sure about accountants in practice.
I am in the process of trying to get my partners code sorted. They appear to have taken the underpayment, pro-rated it to allow for it to be repaid over 8 months, calculated the gross restriction to recover the pro-rated underpayment...then pro-rated it again!:D0 -
My goodness! It used to be the rule of all rules that ANY underpayment for whatever year which was not known at the start of the tax year could not be collected in the current year. Harsh!MichelleUK wrote: »Yep, very recently! From July 2 they are adjusting the tax code immediately that they are aware of a potential underpayment in the tax year. I think HMRC have made employers aware of it (as they will get more employee queries) but not sure about accountants in practice.
I am in the process of trying to get my partners code sorted. They appear to have taken the underpayment, pro-rated it to allow for it to be repaid over 8 months, calculated the gross restriction to recover the pro-rated underpayment...then pro-rated it again!:D0 -
I am in a similar situation though, thankfully for me, with much smaller figures.
On 27 June HMRC posted to me a P2 with a month1 basis coding and a potential underpayment of £20 to be collected next year.
Following Michelle's recent thread I have taken a look at my online tax account which currently shows a potential underpayment of £18 being collected this year by a further reduction in my month 1 basis coding.
I have not received a P2 for that, just seen it in my online account so I'm not sure what coding my pension payer will use. I guess I'm going to have to wait until payday to find out but for those amounts I'm not losing any sleep over it.0 -
They will use the code from 27 June because the one you viewed on your personal tax account doesn't exist anymore.
If you look again today it will probably be different. I can't really explain why but that's what I was told when I questioned a similar thing.
There is a HMRC poster on here, dori2o, who could probably explain it if he saw this thread.0 -
That's how I assumed it would work until this thread came along.Dazed_and_confused wrote: »They will use the code from 27 June because the one you viewed on your personal tax account doesn't exist anymore.
If you look again today it will probably be different. I can't really explain why but that's what I was told when I questioned a similar thing.
Having retired from HMRC over 10 years ago I obviously have no working knowledge of RTI or the online tax account but, as taxpayer (sorry, customer!) and in my own personal circumstances, I feel that the online tax account is a complete waste of space.
The first thing I looked at was the estimate of my current year liability. In that, the online tax account adds together my Civil Service Pension pay to date and the DWP estimate of my full year's State Pension. It then deducts the full year's personal allowance and comes up with an estimated liability which is a fraction of the tax I have paid in one month. That, alone gives me no faith in the system.
However, unlike MichelleUK, yourself and me, who have only seen these mysterious figures in the online tax account, the OP of this thread says that HMRC actually wrote to him. If that is true then you and I are both wrong.0 -
Jimmo,
As dori2o hasn't been along to explain it properly I'll have a go.
You (and the op) have received a new tax code, yours on 27 June, and this will no doubt be used next time your pension (civil service) is paid. When you have looked at your tax account that doesn't show your the code from 27 June it shows a brand new code which would apply if the tax people sent one out that day. If you look again today it could still be different to 27 June (and could also be different to when you last looked from what I was told). It took some perseverance with HMRC to find this out and no one could explain why it was like that.
I found the tax account good for understanding what my ni contributions have been and what my state pension will be although that has taken a nasty turn this week and has moved another year away from coming my way :-(0 -
Update to post#6 above.
My CS pension payday has arrived and, as predicted by Dazed and confused, my pension payer has continued to use the Month 1 basis coding issued to me by HMRC on 27 June.
I am happy with that but in view of dori2o's post at#16 on the other thread http://forums.moneysavingexpert.com/showthread.php?t=5679404
I will definitely not be looking at my online tax account in the near future..0
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