Understanding tax codes

AnnaCutie

I wonder if someone could help me. My husband used to be paid with the following tax code: 647L. He has now been switched to 569L which means about £13 less a month.
I understand the previous code is a code for new employees. But he was not a new employee. He has been with his company for over 10 years!! Can anyone enlighten us as to why this switch (happened in August/Sept)?

Thanks

whitewitch21

Hi - your husband should have received a copy of the tax code which will show why it has changed. It sounds like he has a deduction of some kind which will be taken off his personal allowance of 6475 (674L code). Does he have any company benefits, private medical insurance for example? Or is he paying back some underpaid tax from an earlier year?

If he hasn't got a copy of his new 569L code, the quickest and easiest way to check if its right and if so why is to call his tax office with his National Insurance number and ask them to explain it.

All the best.

AnnaCutie

Thanks. He did have private medical insurance until July when he cancelled it.
I am going to contact the Tax office. Thanks a lot.

whitewitch21

Glad to be of assistance! I bet the medical benefit will be taken out of his new code for 2010/11 and he'll go back to a normal code. Worth a call just to check though.

Mikeyorks

AnnaCutie wrote: »

I understand the previous code is a code for new employees.

No - it's the Code most people under 65 have. £6475 is the basic personal allowance this year (and, after yesterday - also for next) .... and that translates to a tax code of 647.

Everyone under 65 starts with that basic allowance .. but some people will have deductions for earlier year underpayments / benefits provided by their employer and which are taxable etc.

You don't say if the medical insurance was provided by the employer? I'll assume it was and suggest HMRC have just become aware of it (is it fairly recent?) and coded it out. Hence the reduction of £780 in his allowances. It's fairly certainly he would have been advised of this with a revised P2 (Coding Notice) .. which would have qualified the reduction.

The £780 @ 20% (the rate of tax he's paying) = £156pa = your £13 extra per month.

System

AnnaCutie wrote: »

Thanks. He did have private medical insurance until July when he cancelled it.
I am going to contact the Tax office. Thanks a lot.

Unless you husband has written to HMRC giving you authority to deal with his tax affairs they won't talk to you. Get your husband to call them himself