Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • lindabea
    • By lindabea 18th Mar 17, 1:07 PM
    • 925Posts
    • 131Thanks
    lindabea
    Use of Tax Code
    • #1
    • 18th Mar 17, 1:07 PM
    Use of Tax Code 18th Mar 17 at 1:07 PM
    My sister received a tax code of 220L for 17/18 against her private pension. However, I worked out that her tax free allowance after deducted her SP is 2207. My understanding is that her pension provider would use 2200 as her tax free allowance to calculate her tax. So would this mean that she is losing £7 on her tax free allowance and therefore paying £1.40 more tax. I know it's not much, but is that how it works out.
    Before doing something... do nothing
Page 1
    • Dazed and confused
    • By Dazed and confused 18th Mar 17, 1:15 PM
    • 957 Posts
    • 363 Thanks
    Dazed and confused
    • #2
    • 18th Mar 17, 1:15 PM
    • #2
    • 18th Mar 17, 1:15 PM
    No, her pension company will use 2209.

    So she will have underpaid tax by a few pence, which is how PAYE has always worked. The tax due is ignored unless HMRC send you a calculation (for some other reason).
    • lindabea
    • By lindabea 18th Mar 17, 1:28 PM
    • 925 Posts
    • 131 Thanks
    lindabea
    • #3
    • 18th Mar 17, 1:28 PM
    • #3
    • 18th Mar 17, 1:28 PM
    No, her pension company will use 2209.

    So she will have underpaid tax by a few pence, which is how PAYE has always worked. The tax due is ignored unless HMRC send you a calculation (for some other reason).
    Originally posted by Dazed and confused
    Thank you for your quick reply. I used the following link which seems to be misleading as it uses 2200 as the tax free allowance

    http://www.uktaxcalculators.co.uk/

    I'm sure that you are correct in saying that a '9' is added as the last digit of the tax code. I seem to remember this from the days I was working.
    Before doing something... do nothing
    • molerat
    • By molerat 18th Mar 17, 2:24 PM
    • 15,849 Posts
    • 10,064 Thanks
    molerat
    • #4
    • 18th Mar 17, 2:24 PM
    • #4
    • 18th Mar 17, 2:24 PM
    HMRC do not round,they simply truncate. Anything from £2200 to £2209 will be given a code of 220. The extra £9 in the way the tax tables work allows for this and therefore gives an allowance of £2209.08 for a 220 tax code. When you split a tax code between jobs they will deduct 1 point from the second and subsequent codes so that the £9 is only given once. As an example my tax allowance is £12100 and is split across 2 codes, 1045 and 164, which adds up to 1209 and not 1210 but gives me a tax free £12108.12.
    Last edited by molerat; 18-03-2017 at 2:30 PM.
    www.helpforheroes.org.uk/donations.html
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

141Posts Today

1,284Users online

Martin's Twitter