Tax Coding (personal allowence)

The_Ben

Mikeyorks wrote: »

Don't understand?

If you just click on the above link it takes you straight to 'How the 'K Code' works'?

yes the link does.

what i meant was i had searched the HMRC website before and couldn't find the answer as it is explained above.

What is the reason for the negative tax code (owing money) as again my mam has worked all her life, part time while raising kids and towards the end and has had to sign off due to ill health. But has always paid subs.

I accept that this is how it is, would like some clarification is all.

Cheers
Ben

Mikeyorks

The_Ben wrote: »

would like some clarification is all.

The negative code may be nothing to do with 'owing money'. The major reason is that she is in receipt of State Pension. That is taxable ... but is paid gross. So it is restricted from her allowances in order she pays the tax due on it via other income .... such as her other pension.

But the close to £12800 deduction looks excessive for just the State Pension .... so may include an underpayment from an earlier year. Only the P2 will tell you that?

The_Ben

Mikeyorks wrote: »

The negative code may be nothing to do with 'owing money'. The major reason is that she is in receipt of State Pension. That is taxable ... but is paid gross. So it is restricted from her allowances in order she pays the tax due on it via other income .... such as her other pension.

But the close to £12800 deduction looks excessive for just the State Pension .... so may include an underpayment from an earlier year. Only the P2 will tell you that?

I'm not sure how it happened but when i was looking there has been 3-4 changes in the space of a couple of weeks, from 37L and a demand for in excess of £700 to the now K 634

the only income is the state and teachers pension which i see as £1055.37 every month (gross) / 4 weeks (as the state pension is weekly and her teachers pension is monthly.

Could you help, please?

CLAPTON

tax is all about detail
what is her teacher pension gross per annum or per month
what is her state pension oper week or 4 weeks

when was she 60?

Mikeyorks

The_Ben wrote: »

the only income is the state and teachers pension which i see as £1055.37 every month (gross) / 4 weeks (as the state pension is weekly and her teachers pension is monthly.

You will need to split that up into seperate figures (monthly will do) for each pension. As the State Pension for a female before 65 can be a very variable figure. And that is the primary deduction from the allowance.

The figures from the P2 showing K634 would also be fairly useful.

The_Ben

CLAPTON wrote: »

tax is all about detail
what is her teacher pension gross per annum or per month
what is her state pension oper week or 4 weeks

when was she 60?

Mikeyorks wrote: »

You will need to split that up into seperate figures (monthly will do) for each pension. As the State Pension for a female before 65 can be a very variable figure. And that is the primary deduction from the allowance.

The figures from the P2 showing K634 would also be fairly useful.

Mikeyorks, i have never see a P2 and the way my dad had everything arranged if it was there i would have seen it.

As far as i can work through all the coding and tax forms income is as follows

Code K634
State Pension £165 / week
Teachers Pension £373 / month

in respects my dads estate is worthless (as hard as it is to say, and pains me to talk on)

but his company pension is set to pay out about £1k / month that is it.

Because of the teachers pension my mam does not qualify for any benefits. all i want to do is look at the teachers + stae pension and let her know her net income.

**p.s she turned 61 on the 18th of this month**

CLAPTON

based on two incomes as above then her tax code ought to be 165 x 52 - 6475 = 2105/10 = 210K

it's possible that her tax last tax year (i.e. the one she started her state pension ) was incorrect so they are clawing back the unpaid tax
however if she was 60 in Jan 2010 then her pension payments would only have been about 1650 which would not explain the very high K code

she needs to talk to the HMRC and get a notice of coding statement

Mikeyorks

State pension £165 x 52 = £8580 pa

That exceeds the personal allowance (£6475) by £2105. So would give rise to a Code of K210.

But there is an additional £4235 coded out. That suggests an underpayment of £847 from earlier years is also being collected (£4235 x 20% = £847)?

jem16

Mikeyorks wrote: »

Sta
But there is an additional £4235 coded out. That suggests an underpayment of £847 from earlier years is also being collected (£4235 x 20% = £847)?

OP did mention a demand for in excess of £700.

The_Ben wrote: »

a demand for in excess of £700

Mikeyorks

jem16 wrote: »

OP did mention a demand for in excess of £700.

Yes ..... I'd seen that otherwise I'd have been hesitant in suggesting an underpayment. And gone for a bit more vagueness.