Tax Code Help

MEDDLER_3

Hi everyone, I'm new here so please bear with me if I'm in the wrong forum! I was wondering if anyone could help me with some advice for my father. He is currently receiving a Mineworkers pension and incapacity benefit, both of which totalled together just go over £8000 in the year, he is 61. He has received a letter from the tax office saying his code is changing to 89L which means he is only allowed to earn £893 in the year before tax. Is this correct and if so why? My former colleague in the Fire Service who is retired receives just under £14000 a year in pension and his tax code is still the same as mine, allowing him to earn over £6000 a year before tax so why the difference?
Thanks for any help I receive.

Ballymackeonan

Is tax already deducted (at source) from his pension when he receives it? Could be that it's using up most of his allowances.

jem16

MEDDLER wrote: »

He has received a letter from the tax office saying his code is changing to 89L which means he is only allowed to earn £893 in the year before tax. Is this correct and if so why?

The letter from the tax code will explain exactly why the tax code has changed.

Basically though it sounds like his incapacity benefit is taxable. As it is paid gross tax has to be collected if his total income is over the personal allowance which at just over £8000 a year it is. The amount of incapacity benefit he gets will be deducted from his personal allowance and that will give the tax code for his pension.

He is still effectively getting his full personal allowance though as he will pay no tax at all on his incapacity benefit and more than usual on his pension to make up.

MEDDLER_3

Thanks for the advice. I've passed this on but my dad has gone one better. He has sorted out an interview with a tax lawyer who will look at all his details as a favour, which is nice. I'll let you know the outcome in due course.
Thanks again.