P800 - Pensioner not receiving full age related tax allowance

ThreeYearsAndCounting

My mother, age 77, has just received a P800 and a refund of about £1200. On checking her records it would appear that she has been on a reduced age-related tax allowance since at least 2001-2002, and possibly since 1998-1999 (I can't (yet) find coding notices for the earlier years). At no time since she retired has her income exceeded the income limit for the age-related allowance, so we think she should have been entitled to the full age-related allowance since her 65th birthday.

How do we go about claiming back money from previous tax years? The refund she has is in respect of tax years 2008-2009 and 2009-2010. She now has a tax code of 440Y (she is widowed, receives a state pension as well as her occupation pension (total income c£17000pa)). For the two years for which she has been refunded her tax codes were 56L and 135L respectively, which were (presumably) wrong. For 2007-2008 her tax code was 53L which we also believe to be wrong, for 2006-2007 51L and so on back to at least 2001-2002.

Why would the tax office have presumed that her total income was above the income limit and so decreased her allowance for all these years? Is this a general problem, as her circumstances do not seem (to me) to be unusual?

Thanks for any help in this matter.

Mikeyorks

The suffix of 'Y' on the current code indicates an entitlement to the full (over 75) age related allowance.

She should have received P2 (Coding Notice) for the earlier years which show any HMRC assumptions. On top of the £17k income ...... is there any (gross) interest to take into account. Otherwise the £17k would not trigger a clawback since 2000 -01 ....... and her income would have been lower then?

You need to contact HMRC if the P2s don't reveal anything. But put it in writing to establish the claim as you can only go back 6 years ..... and one of those evaporates next month.

ThreeYearsAndCounting

Thanks for the reply, Mikeyorks.

I understand about the Y suffix, but we feel she should have been on a P code since her 65th birthday and a Y code since her 75th birthday.

She has a small (<£1k pa) amount of interest etc. Her income would indeed have been lower in previous years as her teacher's pension increases annually as, of course, does her state pension.

The P2s for 09-10, 08-09 and 07-08 do have a note to say that, if the level of income is below a certain figure (25550, 29290, 29230 respectively), that my mother should contact HMRC, which she did *not* do. I think she just got used to accepting the Coding Notices. The format of the P2(New) is different to the format of the P2(T) which she received in 06-07 and before. The P2(T) does not seem to ask her to contact HMRC about her income (unless I'm missing something), so I think she just filed the P2(New)s without thinking too much about it.

In our view as HMRC have already done a P800 for 08-09 and 09-10 the same 'rule' should apply for 07-08, do you think this is true?

Thanks for telling us about the 6 year limit. So we could claim back to 04-05, is that right?

It does seem that there must be many pensioners in this same situation (ie having a reduction to the age-related allowance, not being required to fill in a Tax Return, so no hope (until now) of a refund, unless they notified HMRC as per the P2). In my mother's case the difference in the allowance averages about £2000, so she has been 'losing' about £400 pa in overpaid tax. :mad:

Best wishes
Jonathan

jem16

ThreeYearsAndCounting wrote: »

Thanks for telling us about the 6 year limit. So we could claim back to 04-05, is that right?

Yes and the sooner you do so the better.

It does seem that there must be many pensioners in this same situation (ie having a reduction to the age-related allowance, not being required to fill in a Tax Return, so no hope (until now) of a refund, unless they notified HMRC as per the P2). In my mother's case the difference in the allowance averages about £2000, so she has been 'losing' about £400 pa in overpaid tax. :mad:

Best wishes
Jonathan

HMRC do not usually lower the tax code for age related allowance unless they have reason to believe the income is over the minimum amount. At some point was this the case?

You say she is widowed - does she have any pension provision from her late husband?

ThreeYearsAndCounting

jem16 wrote: »

HMRC do not usually lower the tax code for age related allowance unless they have reason to believe the income is over the minimum amount. At some point was this the case?

You say she is widowed - does she have any pension provision from her late husband?

Thanks for the reply, I don't think so (to both), but I will ask.

Mikeyorks

ThreeYearsAndCounting wrote: »

Thanks for telling us about the 6 year limit. So we could claim back to 04-05, is that right?

Yes. You have until 31st Jan 2011 :-

http://www.hmrc.gov.uk/incometax/overpaid-thro-job.htm#3

As Jem rightly says .... it's fairly unusual they would restrict the age allowance without some evidence. They usually insist on a P161 at the point the age allowance kicks in - in order to get the full picture at that point. With a cautionary note on the P2 thereafter.

The P2 was piloted in a more personalised form as early as 03-04 ..... but the phased rollout of that (the P2(New)) started in 05-06 and completed 06-07 (I have one of each for 06-07). But there's nothing more significant about the change than it did introduce the personalised version as the trials signified a greater understanding. I'd be surprised if there wasn't a cautionary note to the effect 'this is our understanding' on any P2 with the age related allowance - restricted or not :-
http://www.hmrc.gov.uk/workingtogether/publications/wt-23.htm#b

Bottom line. HMRC offices in general are well behind - I would get a claim in to the normal office in writing. As that protects the 04-05 end date.

Moneymatta

Age allowance is due for the whole financial year in which you become entitled to it.