Nil tax code help confused

crisispoint914

Hi all sorry I have another question, having read through some of the factsheets for help on br. I came across the nil tax code one can someone explain it to me more simply as I didn't understand this sorry for more questions, tia.

confused76

hi there welcome
basically after bankruptcy your tax code is changed to nil until the end of that tax year, and then it goes back to normal. you will receive gross pay so you need to put the tax money to one side as someone called Moon Beever will contact you to request payment of the tax. that's it in a nut shell. not everyone has the nil tax code applied, if it is nearly the end of the tax year they might not implement it

hope that helps

JCS1

I used to explain it in interviews as Inland Revenue giving you the money in one hand, and then you pay it over to the OR with the other hand.

alastairq

Essentially..once BR, one of the items that goes into the BR pot is one's year's income tax.
[something about the HMRC actually demanding one's income tax at the start of the tax year...but is confusing because it is collected throughout the year...in bits..[PAYE]..and PAYE has to be given the same treatment as tax not paid by PAYE]

Thus, those that pay by PAYE get eventually put onto a Nil Tax code.

Once the NT code is in place and active....the moneys which would , in normal circumstances have gone to the tax man, will be subject to an IPA...becoming part of one's assets collected by the OR.

This IPA [NT] lasts until either [a] the end of the tax year, or

until the NT code is removed..usually if one changes job during that year.

Once one acquires a new tax code the NT IPA payments cease.

However..if one declares BR at a time close to the end of the tax year.....there may not be enough time to invoke an NT code....so tax is paid as normal, and no NT IPA imposed.

Also, if one normally paid a very small sum to the HMRC for tax, it may not be viable for the OR to collect that money, so it wouldn't need to be paid [to the OR]...

Normally, the NT IPA moneys go towards the administration costs of the BR.....which usually get paid off first, before any creditors get anything resembling a sniff.

It is with the payment of NT IPA's where the mythical Moonbeever comes to light....