Been given tax code k79-need some advice?

johnsmi

Hi folks,

I have received a letter from tax giving me tax code k79 for 11/12.
My personal allowance is £7475

A brief outline I am on incapacity benefit and receive a local government pension which will be approx £5610 for 11/12

HMRC has explained to me that they will collect the tax from my pension instead of taxing the incapacity as its the best way to do it.

I give them some figures about a mth ago on and on the letter they sent me they break it down as follows for 11/12
*********************************
your personal allowance £7475
taxable incapacity benefit -£8278
tax is due on - £803 (see note 3)

3 Tax is due on this £803. By using code k79 your (name of borough) will add this to your income and tax as follows
20% on first £35000
*********************************

In above they have estimated the incapacity to be £8278 (I claim for an adult dependant as well as myself)
In fact the incapacity benefit for 11/12 is approx £8034.90 a difference of £243 approx compared to their estimate.

I rang the HMRC as I figured they would be taxing me on an extra £243 at 20%=£48.60 extra tax but they say that the tax code is correct.

Just would like your advice as to who is right me or them.

many thanks for all your help

John

CLAPTON

how do you know the IB is 8034 for next year?

johnsmi

CLAPTON wrote: »

how do you know the IB is 8034 for next year?

DWP write to me and let me know the weekly amount so its easy enough to estimate the yearly amount from there, unless of course I am called for a medical and cut off, but as far as the taxman is concerned he wants to know the yearly amount.

john

dori2o

johnsmi wrote: »

DWP write to me and let me know the weekly amount so its easy enough to estimate the yearly amount from there, unless of course I am called for a medical and cut off, but as far as the taxman is concerned he wants to know the yearly amount.

john

Have they told you the amount you will be getting from 6 April, or are you working it out on what you get now?

System

You also need to check when the first weekly payment is due at the new amount for 2011-12.

It is possible that during the tax year (6 APR 2011 to 5 APR 2012) one payment will be at the old amount from last year and then 51 payments at the new amount.

Does that come anywhere close to the total that HMRC have quoted ?
The tax office should have explained how they arrived at their figure when you spoke to them on the phone

johnsmi

BAA1 wrote: »

You also need to check when the first weekly payment is due at the new amount for 2011-12.

It is possible that during the tax year (6 APR 2011 to 5 APR 2012) one payment will be at the old amount from last year and then 51 payments at the new amount.

Does that come anywhere close to the total that HMRC have quoted ?
The tax office should have explained how they arrived at their figure when you spoke to them on the phone

Thanks for replies everybody. I have got full details of the new IB amount payable to me from 14 april 11 and I have taken everything into consideration when calculating the total for the year (if I am still on IB for the whole of 2011) .

I give the tax people the new figure as stated in my first post is £243 less than their amount. The helpline guy did the calculation and said the same tax code still applied. That is the reason I am asking beccause if they are telling my pension provider to add £803 that is the difference between my personal alloweance of 7475 and their calculated incapacity benefit amount of £8278 where in fact I think they should be telling my pension provider to add ££559 ie the difference between my personal allowance £7475 and the actual amount of incapacity benefit of £8034. So working on my figures I would have to pay tax on the extra £243 they say I will get.

That is my logic anyways in calculating this and will leave it to the more expert here to tell me if I am wrong.

Thanks again for all replies.
John

dori2o

johnsmi wrote: »

Thanks for replies everybody. I have got full details of the new IB amount payable to me from 14 april 11 and I have taken everything into consideration when calculating the total for the year (if I am still on IB for the whole of 2011) .

I give the tax people the new figure as stated in my first post is £243 less than their amount. The helpline guy did the calculation and said the same tax code still applied. That is the reason I am asking beccause if they are telling my pension provider to add £803 that is the difference between my personal alloweance of 7475 and their calculated incapacity benefit amount of £8278 where in fact I think they should be telling my pension provider to add ££559 ie the difference between my personal allowance £7475 and the actual amount of incapacity benefit of £8034. So working on my figures I would have to pay tax on the extra £243 they say I will get.

That is my logic anyways in calculating this and will leave it to the more expert here to tell me if I am wrong.

Thanks again for all replies.
John

post the figures so we can chack them.

are you paid weekly, fortnightly(if possible?) or 4 weekly.

Mikeyorks

johnsmi wrote: »

That is my logic anyways in calculating this and will leave it to the more expert here to tell me if I am wrong.

The problem is they work from the figures DWP supply directly to them :

http://www.hmrc.gov.uk/manuals/pommanual/PAYE77080.htm

....... not from the figures you give (see the part where it says 'and to tell you when the rate changes').

Also read this :-

http://www.hmrc.gov.uk/manuals/pommanual/PAYE77055.htm

As with State Pensions .... HMRC and DWP appear to work at approx 1 month tolerances. So if the IB is due to change 14th April - I would guess DWP have just advised them of the varied figure. Give them a couple of weeks to get that translated into a new coding Notice for you (P2)?

But if it doesn't materialise then write to HMRC and copy the Statement from DWP in order to provoke the change.

johnsmi

Thanks Mike.

System

johnsmi wrote: »

....

I give the tax people the new figure as stated in my first post is £243 less than their amount. The helpline guy did the calculation and said the same tax code still applied.

One other remote posibility that may apply (grasping at straws now )

When I phoned HMRC last week to get my tax code corrected, the helpline lady put the corrected values into their system and said that the code didnt change (just like the guy did in your case), but I explained that I had used all the HMRC allowance calculations and I knew what the code should be, so she looked again and found that her system had failed to accept the corrected values she had tried to enter. She tried again and this time the code came out correct (as per my calcs).

If you don't get a revised P2 in a couple of weeks (as per MikeYorks post), then it may be worth another phone call to double check their figures.