BR tax code?

mike_L

I was receiving income based JSA for five months a while ago and due to receiving a monthly payment (£12.92p) from a defunct pension my JSA was reduced by £3.25 (per week). In other word my JSA was reduced by the other amount received; fair enough that’s how it is.

I’ve just finished a temporary work contract and have signed on and again claimed income based JSA. However, I’ve just received notice from HM Revenue & Customs that my tax code for this year (until April 2011) is ‘BR’ which I’ve now know means ‘basic rate’ i,e, 20%.

In other words not only will any JSA now be taxed at 20% but so will my monthly pension payment?

What’s that all about? Why would they suddenly do this?

dookar

I'm no tax expert, but doesn't everyone earning below 37k pay 20% tax?

Oh, and your JSA won't be taxed.

Killmark

dookar wrote: »

Oh, and your JSA won't be taxed.

Incorrect, JSA is counted as income and if you've exceeded your your personal allowance then it is taxed at the basic rate.

dookar

Killmark wrote: »

Incorrect, JSA is counted as income and if you've exceeded your your personal allowance then it is taxed at the basic rate.

No it isn't. It counts towards your personal allowance etc and is a taxable benefit but JSA will not be reduced by taxation.

Killmark

mike_L wrote: »

In other words not only will any JSA now be taxed at 20% but so will my monthly pension payment?

What’s that all about? Why would they suddenly do this?

.
To work out if you are a taxpayer follow these three steps.

• add up all your taxable income
• work out your tax-free allowances
• take your tax-free allowances away from your taxable income

If your taxable income is more than your tax-free allowances, you're a taxpayer. If your tax-free allowances are the same as or more than your taxable income, no action is necessary. If you think that you shouldn't be paying tax but are, you'll be able to claim a refund from HMRC.

codwidow

I got a letter saying I was on code BR too and to tell my employer which is ironic as I was made redundant just under a year ago.

I phoned to ask them what it meant and they said it was an error, they had put me down as my JSA being some sort of second income and therefore taxable on the BR code which was of course incorrect as I havent worked in nearly a year, they still had me down as employed at my old company so in their mind I had two jobs. I think this is what will have happened here, the guy on the phone said it was happening a lot and he changed it there and then.

codwidow

dookar wrote: »

No it isn't. It counts towards your personal allowance etc and is a taxable benefit but JSA will not be reduced by taxation.

JSA is counted towards your earnings for tax credit purposes and counts as income but your £64.30 per week is what you will/would get you would not get it reduced by tax

dookar

codwidow wrote: »

JSA is counted towards your earnings for tax credit purposes and counts as income but your £64.30 per week is what you will/would get you would not get it reduced by tax

Isn't that what I said?

tigtag02

Ring HMRC - there has been an article in the news lately that states they have been sending incorrect tax codes out - yours sounds like it could be one of them.

HTH

codwidow

dookar wrote: »

Isn't that what I said?

Sorry, it appears I did - doh

mike_L

Thanks for the replies.

I was notified of this ‘BR tax code’ decision by two letters from different HMRC departments one referring to my JSA the other to my pension, these are the exact words of the final paragraph of each letter.

“We have asked JOBSEEKERS ALLOWANCE to use code BR for this year, which means you will pay tax at 20% on your Jobseekers Allowance”.

“We have asked CANADA LIFE (who pay my monthly pension of £12.92p) to use code BR for this year, which means you will pay tax at 20% on your Canada Life annuity payroll income”.

There’s a bit more to this which may be relevant. I didn’t mention it before as I thought it might confuse matters not because I want to deceive.

I was made Bankrupt nine months ago and all has gone well (or as well as it can go being a bankrupt) but this had no effect on my previous claim for JSA. Also the Official Receiver made left my pension untouched by the BR proceedings.

Also I am a ‘self employed’ Carpenter (out of work due to a recurring injury, hence my periods of unemployment) which means I normally pay tax at 20% on all my earnings anyway.

But again this had no effect on my previous claim for JSA and should have no effect on any monthly payment.