Nil tax IPA increase and backpay questions

Rosey321

As you probably know from my other posts, my wife's pay has recently increased.
Obviously as my wife's pay has gone up, I would expect her contributions to her nil tax IPA to increase too.
I've never been sure as to what level of responsibility BR's should assume here. Should we be pro-active and pay what we think the tax should have been ourselves or should we let the ORs or CW do the figures and wait to be contacted for another IPA variation? If after the event, would they want backpay? I've read a few other posts and it seems rare that they change the amounts as it seems pre-defined from the offset but obviously circumstances change and obviously it is still an agreement.

Secondly, the increase wasn't implemented last month as we expected so in fact she was given a separate bank advance for the shortfall as it was Xmas. This month, the advance is being reclaimed through payroll and the proper backpay amount reprocessed. Should we declare this backpay? After all, it is only relative to the income increase which we have declared before (in fact we told them of the increase way before the event). It's obviously only a one-off figure too (this would also normally be subject to tax too).

JCS1

How much is the backpay and the increase? As only a couple of months of the tax year left, they probably think it won't be worth changing the NT IPA and will just get the money back from HMRC in due course.

Rosey321

The tax increase would be about £80 a month more than what she is paying now. The backpay was for around £350 (which is what was advanced to her), which was backdated to September. When the figures are put through the payslip which she will get any day now, it might work out a bit more

Rosey321

JCS1 wrote: »

As only a couple of months of the tax year left, they probably think it won't be worth changing the NT IPA and will just get the money back from HMRC in due course.

Yes, don't know the methods they use for this. I guess in theory HMRC and the OR could talk after the payroll year end returns/P14s/P35s etc are filed in May.
From that, they could work out how much tax should have been due on taxable earnings for the tax year. They could then combine the amount of tax collected before the application of NT code and the amount gathered through the IPA.
Possibly, this might be the time they would realise any shortfall? Not sure if the OR would worry or not. I guess at this point they could ask the BR for the shortfall or get it from HMRC who could in turn amend the future year tax coding?

All hypothetical stuff - I'd be quite interested to learn the technical aspects of that.

I think on my initial question above, I'm not going to actively increase the nil tax IPA until instructed otherwise but but I will keep the surplus safe in case the figures are reviewed and we are asked for the extra.

As for the backpay, I might mention it in passing that the increase happened a month later than expected and that some backpay is to be processed. As the OR knows all the salary rates already (as we have always been upfront about the pay increases), he could then have the option to work out the backpay / request payslip etc if he sees fit and in reality I think that would mean that everything has been disclosed as required.

Does all this sound reasonable?

AllNancy

Hope you don't mind me jumping in here Rosey but you've been through what I'm going to go through.

I've been NT for four months and I know they'll want the money. Can you explain the procedure you went through?

Thanks


Nancy

Rosey321

AllNancy wrote: »

Hope you don't mind me jumping in here Rosey but you've been through what I'm going to go through.

I've been NT for four months and I know they'll want the money. Can you explain the procedure you went through?

Thanks


Nancy

Hi Nancy

WIth us, the OR sent and Clarke Willmott sent me a letter stating how much i would need to pay for my earnings related IPA and they also gave me a figure how much I would need to pay once the NT code kicked in which has only happened this month in fact some eight months after our BR date.

With my wife, they only gave her an IPA figure for her earnings but funnily enough the NT code kicked in quite early. We sent Clarke Willmott a letter and copy payslip straight away to tell them that the code was active and asked what we should do as we had received no payment requests for that one. They replied that it should be paid into the same IPA reference and they wanted the money within 30 days of the date of that letter. This was OK as it was only one month.

Our salaries have been static up until now but my wife's has now changed so in theory she would be paying more tax and we should be contributing more however having combed the posts and threads. I've not seen any evidence of a nil tax IPA changing - I think this is because lots of people have changeable salary and they often just work out an average to cut down on their admin (otherwise they may be changing the figure every month!) Not sure what they do though if it transpires you have paid too much or too little.

As for your case, I'm not sure - have you got a normal IPA? My instruction for the NT IPA was on the same sheet as that.

I think one consideration is whether you have kept the money safe in case they do ask for it. I would worry a little bit whether they ask for it within 30 days like they did with my wife as it has gone a bit further down the line - although hopefully after 4 months they might not require such prompt payment (although in their minds, they might want to know where the money has gone if you can't repay instantly).

So yes unfortunately, a bit of a grey area - there's a lot of ifs, buts, shall i and shalln't i's?, will they and won't theys?.

I would certainly recommend keeping the money safe though - even though it would be the biggest test of will power to leave it burning in the drawer!!

Sorry I can't be any more definite but it's not the best documented feature of BR - a feature I'm sure most would rather did not exist as it seems to cause nothing but general confusion!!

AllNancy

Thanks for the info Rosey and I certainly agree with the your last sentence!

The only letter I have received was to say that the tax from my BR date, up to the start of NT was to be claimed from the tax people. I have a separate IPA of £50 permonth to creditors but nothing for the NT. amount .I assumed that when they wanted it they would ask for it.

BUT and this is the answer I can't seem to find.....when it finally dawns on them, do they take it in one hit or do they set up an IPA at so much per month?

Also on the paperwork they said the NT would be active while I was working. I then retired so they then took it from my Teacher's pension. If you change jobs the NT automatically stops. I wonder why this doesn't apply when you retire.

Thanks for your help


Nancy

Rosey321

AllNancy wrote: »

Thanks for the info Rosey and I certainly agree with the your last sentence!
BUT and this is the answer I can't seem to find.....when it finally dawns on them, do they take it in one hit or do they set up an IPA at so much per month?

Nancy

Yes, not at all well documented. When we told them about my wife's NT code having started a few months back, we sent them a schedule and proposed to pay the NT IPA a month in arrears so speak. This was declined though and we was asked to pay the amount straight away (within 30 days).

I thought it a bit strange as the normal IPA runs for 36 months from any given date so I thought a proposal that would have seen the IPA paid up a month in arrears would have been OK. Maybe it's something to do with tax years etc. In heinsight I'm pleased we paid now though as we have paid it!

I've sent a letter back now regarding my other query - decided to mention the backpay and the possible increase in NT code after all. Call it a peace of mind thing - I don't want to mess with our AD which is now exactly 100 days away (not that I'm counting or anything!) and I thought best to keep all things out in the open !!

Rosey321

Just to close off this thread.

Going back to the opening post, I decided honesty would be the best way forward otherwise I would have been fretting non-stop.
I sent a letter the following day and I then declared all the backpay that my wife had and asked for advice about upping the NT IPA.

Had a letter a couple of weeks ago from CW stating the OR has decided not to raise the NT IPA for the final couple of tax months.

Also, no request has been made for any of the backpay either so I think we have been allowed to keep this too. :beer:

peachyprice

Great news Rosey, especially after all the hassle with your IPA.