The right tax code??

zaksmum

O/H started getting carers allowance last November and rang the tax office to tell them only two months ago...purely just a case of "getting round to it". They said they'd amend his tax code as he owed just under £300 in back tax.

Today he got a tax code notification, changing his tax code from 647L to 367L which they say they will look at again after the end of the current tax year. They have detailed his personal allowance of £6475 less the state benefit of £2802, leaving a personal allowance of £3673.

I've tried to work it out myself...but can anyone tell me please if that new tax code sounds right?

His only other income is his private occupational pension from his former employment.

Gertie_Walker

The code will be right if the carers allowance is £53.88 pw. If it is different to to this, he needs to ring his tax office and advise them.

Mikeyorks

zaksmum wrote: »

can anyone tell me please if that new tax code sounds right?

.

It is right - if he gets the standard allowance of £53.90pw?

But the code only applies to income for Apr 10 - Apr 11. And doesn't cover any arrears for Nov 09 - Apr 10 ('£300 in back tax' sounds a bit high to be that). So be prepared you might get a reconciliation statement about that idc.

zaksmum

Mikeyorks wrote: »

It is right - if he gets the standard allowance of £53.90pw?

But the code only applies to income for Apr 10 - Apr 11. And doesn't cover any arrears for Nov 09 - Apr 10 ('£300 in back tax' sounds a bit high to be that). So be prepared you might get a reconciliation statement about that idc.

Thanks mikey. What's a reconciliation statement? He does just get the £53.90 per week.

Should he owe 20% of the carers allowance for each week that he's been getting it? That would be £10.78 a week - 20% of £53.90?


He's never had to work out his tax before, having always been on PAYE so his tax was always deducted before he got his wages.

Thanks.

Mikeyorks

zaksmum wrote: »

1) What's a reconciliation statement?

2) Should he owe 20% of the carers allowance for each week that he's been getting it? That would be £10.78 a week - 20% of £53.90?

1) It's the P800 that most of the current threads (re PAYE underpayments) on here are related to at the moment. Hot off the new PAYE system ... and just having been issued for 08-09 and 09-10 (but will be phased through into Dec). If they haven't reflected the Carer's payment back into 09-10 yet ........ then I really can't say when / whether you will hear. I was just wanting to be sure you understood the coding restriction only covered the current year.

2) I worked on that basis when I said the £300 'back tax' sounded a bit high for Nov 09 to Apr 10. But it does largely depend on how much he's getting from his occupational pension. If that exceeds his initial £6475 personal allowance (but doesn't take him into 40% territory)? Then the 20% of £53.90 is right.

jimmo

When someone's code number is reduced normal practise is For HMRC to operate the new code number on a week 1 or month1 basis and create a "Potential Underpayment".
It should all be explained on the P2 Notice of Coding under Special Notes.
http://www.hmrc.gov.uk/manuals/pommanual/PAYE11020.htm
basically your O/H should have been paying £10.78 per week extra tax since he commenced to receive Carer's Allowance.
A week1 or month 1 code will put that right from now on but not collect the extra tax from 6 April to the date the new code is used.
So if the new code is operated for the first time in week 29 of the tax year your O/H will have a potential Underpayment of 28* £10.78 =£301.84.
HMRC then intend to collect that over the following tax year by a further coding adjustment.
On top of that there is also the question of how much he underpaid in 2009/10. They haven't worked that out yet.

zaksmum

Thanks mikey and jimmo.

Mikey, yes, his occupational pension does exceed the personal allowance...in fact it's around 16K per year.

Then he started the carer's allowance on top of that, in November.

Wouldn't it be so much easier to send the tax office a cheque? Is that something they would allow?

Gertie_Walker

HMRC likes to collect tax at source as far as possible, for one things its cheaper and secondly they are guaranteed their money!

zygurat789

Gertie_Walker wrote: »

HMRC likes to collect tax at source as far as possible, for one things its cheaper and secondly they are guaranteed their money!

Even from football clubs?

Mikeyorks

zaksmum wrote: »

Wouldn't it be so much easier to send the tax office a cheque? Is that something they would allow?

They would ..... and it's covered in the 'What Happens Next' leaflet that has gone out with underpayment notices for 08-09 & 09-10 :-

If you would prefer to pay now, you can contact us to discuss how to pay by using the phone number or address on your P800 [FONT=BAPPW G+ IR Modena,IR Modena][FONT=BAPPW G+ IR Modena,IR Modena]Tax Calculation[/FONT][/FONT]. If, after contacting us, you want to pay by cheque, we will send you a payslip that you should return with your cheque made payable to ‘HM Revenue & Customs. VP‘. Please put your National Insurance number after the letters ’VP’. Send your cheque and payslip to HM Revenue & Customs, Bradford, BD98 1YY.

I'd caution against that route for 2 reasons. It's a 'Voluntary Direct Payment' ...... it's anything but automated and weaves a tortuous route through HMRC processing and accounting. Far more likely to go wrong than any 'assessed' payment. Secondly - you're not going to be charged interest on this .... so just put the money on one side and pay it via PAYE as most would. Much more MSE ! If you're 'tidy minded' ..... yes, it does take a while to get up to date. Personally I'd live with that?

zaksmum

Thanks very much mikey for that information - you've made things a lot clearer for me now.

O/H will just let the tax people do it all via the tax code rather than send a cheque if it's the best option.

Thanks again for your help.