P800 Tax Notice

mandymoo72

SMy mother, a pensioner, has received a P800 tax notice indicating an underpayment of tax over 2 years.

I can confirm that the income amounts on the fnancial year 2009/10 are correct but have still to confirm the amounts on the 2008/09 year.

She gets a state pension every week, a private widows pension every month and she works part time. She has paid tax on this private widows pension.

Although she does work part time, she only earns approx £45 per week but this income goes towards her total taxable income. What i have noticed is though, that she has standard tax code of 647L on her works P60 and a code of 121P on her private widows pension.

Does anyone know if this is correct? I think the underpayment has come from her earnings in her job cos she hasn't paid tax but if the code her work has doesn't allow them to deduct tax how on earth can she pay tax on these earnings? Surely, the tax office should have informed her employer of her tax code as the pension provider has the correct code.

Any advice greatly appreciated. thanks

Gertie_Walker

She should have had code BR, or basic rate tax deducted from her wages - she has effectively has her tax free allowance twice.

Did she inform the tax office that she had a job because if she is only earning £45 a week, her employer would not inform HMRC that she is working for them as this is below the taxable limit (for someone with no other income).

mandymoo72

thanks for your reply.

she has been in the same employment for the last 30 years with no break albeit her hours have reduced. In the past she has paid tax depending on hours etc.

Whats confusing me is why she has a normal persons tax code when she has been in receipt of a widows pension for the last 14 years and also the state pension for the last 7 years. Tax has been deducted from the widows pension appropriately. She has never been told to complete a tax return.

Her work must been told to apply the 647L code - she normally receives a tax code notification from HMRC advising what her tax code is and normally it is one ending in P due to her age.

Surely they must have know she'd been working cos she has never hidden it and also the employer would have completed a return when she started years ago. why have they only went back 2 years?

suso

mandymoo72 wrote: »

thanks for your reply.

Her work must been told to apply the 647L code - she normally receives a tax code notification from HMRC advising what her tax code is and normally it is one ending in P due to her age.

why have they only went back 2 years?

I suspect that she her employer have never received a code and have automatically been applying the updates each year. Has she ever received a coding notice for the employer?

The calc been done automatically and the previous years have been marked as balanced so the computer isn't even looking at them.

HMRC staff are being instructed not to dig too deep, unless there is evidence of criminal intent, or the individual taxpayer asks them to.

mandymoo72

i think she'll need to accept that she owes the money although I will try and get them to extend the repayment over maybe 2 years as opposed to 1 year. Have also told her to phone them up and tell them to inform her employers of her correct tax code so they can apply that or the BR code cos don;t want to be a position this time next year saying she owes another years tax. No doubt she will owe tax from 1st April till now on earnings she has received.

All the tax codes notices she has had from HMRC state the widow pension provider on it and nothing about her employer. To be totally honest she doesn;t understand tax and she thought because she was earning (from the employer) under the tax threshold she was okay - she didn't realise that her state pension, the widows pension and her earnings were totalled together and that's what tax should have been calculated on. It is very confusing anyone.

Tarasam

A quick tip, dont ring today the systems are down for maintenance, they're running again from Mon. 8am - 8pm

flossy_splodge

Just for others' info, many employers automatically go for the 'no need to pay tax' option on those over retirement age as it's easier for them. I've had this happen too and when I asked WHY they didn't deduct tax the only answer I got was 'you didn't tell us to'! It's all about passing the buck.
Can cause dreadful problems but I guess the bottom line is 'don't assume, always check' wherever anything financial is involved as unfortunately it is ultimately YOUR responsibility, not the employers or HMRC.

Careful_ly

Hi

You dont state how old your Mum is, but from you saying shes been drawing her old age pension for 7 years I'm assuming shes over 65.

There are higher tax free allowance for the over 65s which apply for the whole of the tax year in which her 65th birthday falls.
2007/08 £7550
2008/09 £9030
2009/10 £9490
2010/11 £9490
Don't assume they are correct that she owes tax do your own calculations.

TM1976

It's impossible to say without seeing her total income, pension and wage, but if her employer taxes her on the 647L code and she only earns £45 per week that would mean she had around £4k of unused personal allowance and as such would have underpaid tax rather than overpaid.

As Careful-ly points out she also has an age allowance but this doesn't appear to be fully reflected in her pension tax code either. If she hasn't earned more that £9,490 in the tax last tax year she shouldn't have paid any tax at all.

suso

The op said her widows pension was on 121P, as the P suffice only applies to people who are between 65+74 then it is taking into account the extra age related allowances,

Presumably there is a state pension of approx 8270 ukp.

Niggles

If, as would seem likely, your mother is over 60 and has a total income under £17,000 pa then Tax Help for Older People should be able to help her sort this out for free. ( https://www.taxvol.org.uk)
Certainly it would appear, as suso implies above, that your mother's works code should be BR not 647L as she is possibly receiving a state pension and a private widows pension that absorbs all of her higher Personal Allowance. However without full facts and figures it is difficult to confirm this.