Bankruptcy and NT (Nil) Tax Code

debtinfo

it shouldnt affect you as there will not be enough time to implement the NT code before the new tax year in april. Keep checking your tax code on your wage slip though just in case

fiveyearplan

Thats why I timed my own BR to avoid nil tax code. I didn't want the pressure of getting my tax money and then having to pay it - too tempting!

t666

fiveyearplan wrote: »

Thats why I timed my own BR to avoid nil tax code. I didn't want the pressure of getting my tax money and then having to pay it - too tempting!

yes I find it strange that they do it like this : it seems a recipe for disaster... esp for me!!!! Although I am getting good at this budget thing now


thanks guys. I was going to put this off til April but if I go br the first week of april I would have to collect the tax money for another year?

I guess I will stick to 5th March if thats the case.

JCS1

t666 wrote: »

yes I find it strange that they do it like this : it seems a recipe for disaster... esp for me!!!! Although I am getting good at this budget thing now


thanks guys. I was going to put this off til April but if I go br the first week of april I would have to collect the tax money for another year?

I guess I will stick to 5th March if thats the case.

Tax year ends 5th April, so go BR up to 5th April and no Nil Tax Code, 6th April and after and there will be.

didsy1

so i went br on april the 4th , financial year starts april the 5th does this mean all my tax was up to date in and i wont get nt

DarkConvict wrote: »

That is what i also used as reference. Seems to be the best way to explain it.

As I see it. All unpaid tax before the bankruptcy is covered by the bankruptcy (as you mention above).
However any tax to be paid after it, i.e. all wages from the date of bankruptcy to the end of the tax year is actually due to have tax paid on it, even thou due to an NT tax code no money is actually taken from your wages. This means that tax 'debt' would be amassed after the bankruptcy order, and thus not covered.

I.e. Say you pay £200 a month income tax.

Paid Tax on April, May, June.
Not Paid Tax on July, August.
Go Bankrupt in August.
NT Tax code applys from September til April.

So no tax is taken from the wages after august, but is still actually owed to the tax office. Meaning only year previous unpaid tax in July is covered by the BR. This would leave September til April still payable, a total of 7 x £200 = £1400.

From what i have seen, either the official receiver takes the tax to pay this debt on your behalf, until you are issued a new tax code in April, or you are left with the additional money but then have to pay up the tax debt amassed from after the bankcrupty in the following April.

So the key bit is, you do not pay any tax, but you do still owe it. And it must be paid.

Is this right?