Tax code k32 any ideas?

johnsmi

Hi folks,

I will be receiving incapacity beneift of approx £8438 for incoming tax year 12/13. The DWP where I live only usually take a nominal amount of tax each ear of approx £200

I will also be receiving an occupational pension of approx £5600.

The tax man has given me tax code for the coming year 12/13 of k32.

The tax man has messed up before for year 10/11 not taking enough tax so I will owe about £880 underpayment after the year 11/12 is finished as he has just sent me a new code for remainder of this year k600 which is reulting in more tax being taken for the last 2 remaining mths of this year. My question isn't about this .

What does the tax code k32 mean? The taxman has explained in letter that my personal allowance for 12/13 will be £8105, my taxable IB will be £8438 so tax is due on £333.

It goes on to explain that the tax code k32 will be sent to my occupational pension provider and my question is,

1 Will the pension provider also tax me at 20% on the normal pension and then add K32 to take the additional tax? this would seem the correct thing to do, because as stated above the DWP dont really tax me that much maybe £200 per year.

2 Or will the pension provider simply apply tax code k32 for 12/13 resulting in an underpayment of tax for the forthcoming year again.

Thanks very much for all your kind advice.

John

jennifernil

When you have an untaxed at source benefit such as state pension or IB, your tax allowance will be set against this first. If there is still surplus income, as in your case, that is added to your occupational pension by means of the K code so that the tax is collected correctly.

K32 means a notional £320 is added to your pension of £5600, giving £5920 to be taxed at 20%, so tax of £1184 in total.

See here.....

http://www.hmrc.gov.uk/incometax/codes-basics.htm#3

johnsmi

Thanks very much for clearing that point up for me ..I'm very grateful

Now as regards the underpayment of £1090 for 10/11 and been issued with a new tax code for 11/12 which is k600 (which actually meant I paid an extra £84 in tax in Februalry) and will no doubt do so in march too, am I right in thinking they may well adjust the tax code k32 for 12/13 to reclaim more of the underpayment for 10/11?

If they do so what month usually in 2012 will they have another look at my tax affairs?

Thanks for your kind help

John

dori2o

johnsmi wrote: »

Thanks very much for clearing that point up for me ..I'm very grateful

Now as regards the underpayment of £1090 for 10/11 and been issued with a new tax code for 11/12 which is k600 (which actually meant I paid an extra £84 in tax in Februalry) and will no doubt do so in march too, am I right in thinking they may well adjust the tax code k32 for 12/13 to reclaim more of the underpayment for 10/11?

If they do so what month usually in 2012 will they have another look at my tax affairs?

Thanks for your kind help

John

If the underpayment is not in the code at the moment it means HMRC are not actively looking to collect the underpayment via a restriction to your tax code. You may well find you receive a payslip requesting payment in full of the underpayment in the not too distant future.

If the restriction to collect the underpayment is not in the code by the 5th April it will not be included in the code after this date. HMRC will not introduce an underpayment to a code after the start of the tax year.

What restrictions have been allocated to your code for 11/12 to make it k600?

To answer your final question, HMRC will be in a position to review you 11/12 affairs after they have received all your P60 details from your pension provider/DWP. They should have this information input on the system by mid/end June so anytime after that the system can auto-review the 11/12 year and issue any relevant calculations.

You can speed up this process by telephoning HMRC when you receive both your P60/P60 substitute. I may be that they don't yet hold the information when you call, at this point you can send the documents (keeping a copy for yourself) to HMRC and ask them to do the assessment using that information.

johnsmi

Hi,

Thanks for replies. The k600 code which I was issued with on 29 jan 12 is to collect the underpament, but obviously wont do so by 5 april 12 Still will be approc £880 owing in undepayment for 10/11.

The k32 code issued for 12/13 is not related to the 10/11 underpayment (explanation further up the thread) so I take it they will issue me with a different code after they get the 11/12 income figures on their systems?

Thanks a lot for all the help
John

dori2o

johnsmi wrote: »

Hi,

Thanks for replies. The k600 code which I was issued with on 29 jan 12 is to collect the underpament, but obviously wont do so by 5 april 12 Still will be approc £880 owing in undepayment for 10/11.

The k32 code issued for 12/13 is not related to the 10/11 underpayment (explanation further up the thread) so I take it they will issue me with a different code after they get the 11/12 income figures on their systems?

Thanks a lot for all the help
John

What was the code prior to the K600 one.

Unless the underpayment being collected in the 11/12 code is for a year earlier to 2010/11, or is a potential underpayment for 10/11 that was carried forwards into the 11/12 year from 6 April 2011. Then it is not possible to put the 10/11 underpayment into the 11/12 code.