UNderpaid Tax again

sammy7978

Hi im posting this on behakf of my Dad, He retired 3 years ago but now has a part time job he recieves pensions etc so pays tax. For the last 3 years he has recieved a letter each year saying he has underpaid. They sort it out he repays it and again year after it happens again.

Is there anything he can do? He is being upfront with his incoming money and giving them all the info they need but still they get it wrong

pjclar02

Hello there

The best thing to do is to ensure that the respective PAYE codes applied for his job and his pension are as accurate as they can be. This will depend upon how much he earns through each source. But if he applies a 747L tax code against his pension, and his pension is more than £7,475 then the code for his part-time job would be best to be BR so that 20% tax is withheld on all of this income.

However, this will become complicated if he is a higher rate taxpayer or is in receipt of age related personal allowance. The logic is sound, but you will need to work out which codes would be best and then discuss with HMRC which may not be quite so straightforward!

xylophone

http://www.hmrc.gov.uk/rates/it.htm http://www.hmrc.gov.uk/pensioners/paying-retire.htm
Life is much easier if his tax allowance(s) can be set against one of his sources of income with the rest taxed on BR code.
In his position, he is likely to have to complete a SA form each year so that in the end it does all come out in the wash as you might say - in the meantime, assess what his tax liability should be and keep enough to pay it in an account specially set up for the purpose (highest paying internet account perhaps).