tax code

motherb

hi can anyone tell me if this is right please. my husband has just recieved his code for year 2011/12 he gets 5200 a year benefits of which they say his code will be 747l which is right he then receives a company pension of about 2900 and say his code will be br on this and taxed at 20% on all of this is this right thanks

CLAPTON

the 'normal' tax code for primary job for 2011-12 is 747L giving a tax free allowance of 7475 per annum
if he gets benefits in kind totalling 5200 then his tax free allowance should be reduced to 7475 - 5200 = 2275 giving a tax code of 227L

if he has a second income just that the two income combined is less than the 40% tax band then his second income should be BR i.e. taxed at 20%

jem16

motherb wrote: »

hi can anyone tell me if this is right please. my husband has just recieved his code for year 2011/12 he gets 5200 a year benefits of which they say his code will be 747l which is right

Paerhaps you can clarify what you mean by £5200 benefits? Do you mean he is working and he receives £5200 worth of benefits in kind added onto his salary or do you mean he is receiving £5200 of state benefits?

motherb

hi jem he receives 5200 state benefits incapacity

CLAPTON

motherb wrote: »

hi jem he receives 5200 state benefits incapacity

OK so I've misunderstood your post

in which case 747L is an appropriate tax code for his emplyment
and BR is appropriate for the pension

motherb

thanks clapton

jem16

motherb wrote: »

hi jem he receives 5200 state benefits incapacity

Thanks.

There is still some confusion here.

If he is receiving incapacity benefit I am assuming he is no longer employed - is that correct?

If it is can you confirm that the only income he receives is the £5200 incapacity benefit plus his company pension?

FOREVER21

I think some of the info is wrong.
The basic tax allowance for next tax year is 7475, if he gets £5200 incapacity , as DHSS can not tax this at source this should be taken from the basic allowance of 7470 resulting in a tax allowance of 2270 which will become 227L tax code.
Further he is left with an residue of 2275 which should be tax free before his pension is then taxed at 20% using tax coe BR

My father was in a simlar posiion last yer and ended up having to contact HMRC to get matters sorted.

jem16

FOREVER21 wrote: »

I think some of the info is wrong.
The basic tax allowance for next tax year is 7475, if he gets £5200 incapacity , as DHSS can not tax this at source this should be taken from the basic allowance of 7470 resulting in a tax allowance of 2270 which will become 227L tax code.

Yes that bit's fine.

Further he is left with an residue of 2275 which should be tax free before his pension is then taxed at 20% using tax coe BR

If the only income he has is incapacity benefit ( which is paid gross to his bank account) plus his company pension then there is no need for 2 tax codes.

Tax code 227L would be the code used for his company pension and there would be no BR code used at all.

Two tax codes are only required when there are two income streams operating PAYE. State benefits are not operated under PAYE,

That's what I'm trying to clarify with the OP.

motherb

hi that is right he has 5200 incapacity paid directly into bank plus his pension but he has had two letters from hmrc one saying his code is 747l for his incapacity benefit and the other one which came in the same envelope saying his pension is br code which i thought was wrong thanks

jem16

motherb wrote: »

hi that is right he has 5200 incapacity paid directly into bank plus his pension but he has had two letters from hmrc one saying his code is 747l for his incapacity benefit and the other one which came in the same envelope saying his pension is br code which i thought was wrong thanks

747L cannot be attached to his incapacity benefit as it's not operated under PAYE.

He should have a tax code of 227L attached to his pension and no other code. This will then take the necesary tax due on both his pension and incapacity benefit.

I suggest he phones HMRC.