Confusion with Tax codes

ka7e

My mother (77) is in receipt of the State pension. My father died in Feb and she is now paid a portion of his work pension from the Teacher's Pensions. These are her only 2 sources of income. Teacher's Pension originally put her on tax code 647L, but has recently changed it to K52.

Neither of us can understand the official explanation of her new tax code!

Can anyone help decipher this, please

[Deleted User]

from HMRC:

How the 'K code' works

If your deductions (untaxed income on which tax is still due) are more than your allowances you'll be given a K code, to ensure you pay tax on the excess. Whereas with other tax codes the number indicates the amount of income you can have tax-free, the number in a K code multiplied by ten broadly indicates how much must be added to your taxable income to take account of the excess untaxed income you received.
K code example


K497 means:

• your untaxed income was approximately £4,970 greater than your taxable income
• as a result, approximately £4,970 must be added to your total taxable income to ensure the right amount of tax is collected
  (The actual calculation is more complex and of course precise - and ensures that the exactly right amount is added to your taxable income.)

Newly_retired

I've just found out via my teacher's pension that I've been put on a K code too. This will be because last year I started to get a very small pension from France, obviously untaxed. But as this tax year I will be 65, I thought I would be on the higher personal allowance which would mean I could have more income before being taxed. I have written to HMRC but had no reply. Maybe a 3 month wait...?

claire07

A similar thing's happened to me. I'm 62 and get state pension and a small company pension but this month my tax code on my company pension went from 647L to K365 and my pension halved. I posted on the Pensions MSE site and was told I shouldn't have been taxed at 647L as I had a state pension. I phoned HMRC and they said they were doing this as my company had not taxed my pension and state pension correctly and I owed back tax. I hadn't been sent an altered notice of coding so this came out of the blue. Unfortunately when I rang up the explanation was so technical I couldn't work out why they were taking so much for the next year.

merlino

Hi
regarding the higher tax allowance at 65, from HMRC:-

Section 9 of the Family Law Reform Act 1969 states that you are entitled to the higher tax allowance from 5 April in the year that you are 65.

I am 65 in October 2011 but will be applying for the allowance from next march to make sure it starts on 5 April 2011.

regards merlino

Newly_retired

Does one have to apply for this allowance? I assume HMRC knows my age and will give me the allowance automatically. Wrong?

scoobs02

HMRC will send you a form P161 to complete. they know your age, but dont give it automatically. It depends on how much you income will be, as you may have reduced age allowances.

KeithP

Newly_retired wrote: »

Does one have to apply for this allowance? I assume HMRC knows my age and will give me the allowance automatically. Wrong?

I spoke to HMRC about this as I'll be 65 later this tax year.

They told me I needn't do anything and they would write to me some weeks before my birthday.

As my birthday is in late March, I'm looking forward to a nice rebate.

merlino

you could be receiving the higher rate taxcode now (from 6th April) as this is the year you are 65

dzug1

Newly_retired wrote: »

Does one have to apply for this allowance? I assume HMRC knows my age and will give me the allowance automatically. Wrong?

I think you would be wrong in assuming they know your age - or know it in a way they can make use of it. (The new computers, when they finally work in the way intended, may fix this). At present it's a bit hit and miss.

So tell them anyway.

pollypenny

Back to K codes - get on to your local HMRC. They had down as receiving my teacher's salary and teachers' pension.

However, with the much vaunted cuts in the public sector, you might have difficulty in finding someone to talk to!