ipa from nt tax code query.

vally46

Hi,firstly a quick thanks to all that contribute,we went BR last month OR rang tuesday,have letter today saying off my income i agree to pay 180 pound a month until next april,which starts when tax code goes to NT.
Just looked at my pay slip im paying 90 pw in tax so as the order claims 45 pw,what happens to the other 45,is it mine or are the OR going to want it in 12 months time,hope that makes sence,cheers.

JCS1

Check the wording, are you sure it's a NT tax code IPA? NT Tax code only apply for the tax year you go bankrupt in, so would revert back to normal as from yesterday (6th april).

alastairq

hi...the initial sum quoted is often an estimate, based upon your statement of earnings at the time of BR.

Once your NT code is in place....send wageslips to the OR's collector[usually Moonbeever]....and they will calculate the amount they require....for example, if a wage slip shows a basic wage only.

In the end, you will pay to the OR more or less exactly what you would have paid HMRC via PAYE.......sometimes, the BR comes out on top, too.

vally46

Ipa sec 310a insov act 1986.i fred bloggs agree to pay the amount by which my take home pay will inrease as a result of the nt coding,blah blah,the first contribution will be made in the month in which hmrc applies the nt and will continue until the end of the current tax year.
Thats the basic outline,so if discharged early would i still send cash to moonbeaver or would nt be removed.

vally46

Ipa sec 310a insov act 1986.i fred bloggs agree to pay the amount by which my take home pay will inrease as a result of the nt coding,blah blah,the first contribution will be made in the month in which hmrc applies the nt and will continue until the end of the current tax year.
Thats the basic outline,so if discharged early would i still send cash to moonbeaver or would nt be removed.

JCS1

What date did you go BR? The NT tax code would last from that date to the 5th April. If you want bankrupt last month, then you tax code will go back to normal from this month's pay, so you won't need to pay anything over.

vally46

Went br 9th march,or rang tuesday,letter says it doesnt start until hmrc put nt in place,so it will start sometime soon,so i think i will pay to next year.yes ?

alastairq

Hi.as JCSI says....the NT tax code will only apply for the year BR is petitioned.

Once the new TAx year starts any [previous] NT codes [from the last tax year]...revert to a 'normal' tax code, [which depends on individual circumstances.]

So, since your BR was so close to the end of that tax year, there would not have been time to implement a NT code, so your tax code remains as is.....and there is no NT-based IPA to pay.

HAd you become BR today, then a NT code would be implemented in the future..as we are now in the 'new' tax year....

the letter you received is a standard letter.....not date related.

alastairq

by way of explanation....income tax is included in a BR.

At the start of each new tax year, everybody [who pays tax] effectively gets a 'bill' for tax for that year.

To not discriminate against PAYE..[where the bill is divided up into set amounts]...the NT code is implemented. [those who pay yearly, get theirs included in the BR].

The NT code continues until the next new tax year...or until a change of employment occurs..when a new tax code is issued.

At that point the NT IPA ceases. [it is an IPA because the amount which normally went to HMRC, is now surplus income].

Because your BR date is so close to the new tax year, there was no time to implement the NT code for you.....so as far as you are concerned, nothing changes.

[exactly what arrangement the IS has with HMRC regarding handing over last year's tax to your BR estate I'm not sure]

vally46

Hi quick up date,had letter today explaining my nt tax code was a mistake and will not apply as went br in march.thanks guys.