over 75 tax code

aloise

HB has just had his new tax code in. Its 1036t. He has £6915 state pension, £107 a small council pension and £3480 works pension.
i know he will only be paying a very low tax but i am curious about the T. I thought t was if you had over £24000 coming in and lower than that was P Just curious really.

Mikeyorks

aloise wrote: »

Its 1036t. .

Are you sure? That's £10365 of allowances. I know the Coalition have been a bit generous - but not that much.;)

The State Pension deduction should reduce it by at least 691 points?

'P' is used where you're entiltled to the full age related allowance (therfore no claw back as total income over £24k). 'T' tends to be used where there is one or more item still under review. I'm a bit unsure if HMRC issue a fresh P161 (Pension Review) around the 75 year point ..... as they do at 65. May relate to that.

jimmo

As he is over 75 his code suffix should be V, not T.
http://www.hmrc.gov.uk/manuals/pommanual/paye11045.htm

At first glance code 1036 looks way too high regardless of the suffix letter i.e insufficient tax will be deducted.
Just to be clear, is his small council pension of £107 taxed at source?
I assume the code 1036T is to be operated against his £3480 works pension. Is that right?

aloise

jimmo wrote: »

As he is over 75 his code suffix should be V, not T.
http://www.hmrc.gov.uk/manuals/pommanual/paye11045.htm

At first glance code 1036 looks way too high regardless of the suffix letter i.e insufficient tax will be deducted.
Just to be clear, is his small council pension of £107 taxed at source?
I assume the code 1036T is to be operated against his £3480 works pension. Is that right?

yes his £107 is taxed at source. I am putting the code down exactly as it states on the form.
"1036t to send to fords pension funds administration "
They have got his married couples allowance as £17385. That does sound a lot, but i really don't know much about it. We don't want to underpay either, all the hassle would drive me mad.

jem16

aloise wrote: »

They have got his married couples allowance as £17385. That does sound a lot, but i really don't know much about it. We don't want to underpay either, all the hassle would drive me mad.

Married Couples' Allowance for 2011/12 is £7295. Personal allowance for over 75 is £10,090. Added to gether this makes £17,385

Then take off the £6915 state pension which comes to £10,470 which would give a tax code of 1047 (plus whatever letter is appropriate). Now the only thing I'm unsure of is how the Married Couple's Allowance affects the tax code as tax is due at 10% and not 20% on that allowance.

Perhaps you could give the exact wording on the P2 coding notice of how the code is worked out - i.e. allowances and deductions etc.

System

Can you post the exact details entered on the coding notice so we can see how it is worked out.

£17385 sounds to me like it is the personal allowance of £10090 plus £7295 married couples allowance.



Oops must have crossed over with jem16's post

aloise

OK, here goes, thank you all so much for trying to help me.

personal allowance
married couples allowance £10090
£7295
£17385

other earnings - £107
state pension/state benefits - -
a tax free amount of £6915 -£7022
£10363
we turn £10363 into tax code 1036t to send to Fords pension funds administrator

This is exactly as it is worded on the coding notice.

jem16

aloise wrote: »

OK, here goes, thank you all so much for trying to help me.

personal allowance
married couples allowance £10090
£7295
£17385

OK - that's just as I thought.

other earnings - £107
state pension/state benefits - -
a tax free amount of £6915 -£7022
£10363
we turn £10363 into tax code 1036t to send to Fords pension funds administrator

This is exactly as it is worded on the coding notice.

I had not included the £107 for the other pension so taking that off my figure of £10,470 would give £10,363 and a tax code of 1036T just as they have said.

As I said earlier - not sure exactly how the Married Couple's Allowance worked on the tax code but they have put it down as the full amount. So if that's normal behaviour then tax code is exactly right. However I would have expected it to be half of this amount as it's only taxed at 10%.

EDIT : Just had a quick google to see how this worked. Apparently if your income is below the personal allowance of £10,090 plus the 10% savings band of £2560 making £12,650 then the Married Couples' Allowance is put down as the full allowance of £7295. As the total income is £10,502 in this case the full allowance is applied. So tax code is correct.

http://taxaid.org.uk/situations/pensioners/paye-and-the-married-couples-allowance

aloise

jem16 wrote: »

OK - that's just as I thought.



I had not included the £107 for the other pension so taking that off my figure of £10,470 would give £10,363 and a tax code of 1036T just as they have said.

As I said earlier - not sure exactly how the Married Couple's Allowance worked on the tax code but they have put it down as the full amount. So if that's normal behaviour then tax code is exactly right. However I would have expected it to be half of this amount as it's only taxed at 10%.

EDIT : Just had a quick google to see how this worked. Apparently if your income is below the personal allowance of £10,090 plus the 10% savings band of £2560 making £12,650 then the Married Couples' Allowance is put down as the full allowance of £7295. As the total income is £10,502 in this case the full allowance is applied. So tax code is correct.

http://taxaid.org.uk/situations/pensioners/paye-and-the-married-couples-allowance

Thank you so much for that. It's set my mind at rest. We were hit by £246 bill 2 years ago and we never did find out why. He was a lollipop man then and was paying tax on that and fords.
I didn't want to go down that road again.:T

Mikeyorks

aloise wrote: »

i know he will only be paying a very low tax

Just to clarify - and going back to your original. The coding takes care of both the State and the 'small council' pension. And there should be no tax deducted at all from the works (Fords?) pension. As the remaining allowances cover it to a significant degree.

Indeed - and despite the (relatively mild) increase in the personal allowance at the age of 75 ...... he must have done a fair bit of 'lollipopping' to create an underpayment. Possibly this was accumulated over a few years?

ceeforcat

On the 't' front - generally after budgets or at the start of the new tax year employers or pension providers will be asked to increase L, P or V codes by a certain number of points e.g. L codes will be increased by 100 next week. T codes will have no increase and are usually relevant in second jobs or sources of income to stop the increase being applied twice.