Tax code question

Stephen_Leak

I lost my job late last year and I'm now surviving on my BT pension of £581.44 a month and savings. This is OK, as I saved while I was earning for a rainy day and it's raining.

Apparently, my pension provider used tax code 747 instead of BR for a few months last year when I was working and my personal allowance was deducted in error from my pension as well as from my salary. As a result, I owe £856 tax. Again, it's OK, as I saved it, and paying it back in instalments is to my advantage.

Anyway, my new tax code is something like 332. Apparently, the standard tax code and personal allowance has changed from 747 and £7475 to 810 and £8105. I owe £856.

I know that I have to repay the tax I owe, and I understand that I must pay more of what I get in tax because my income is lower. But these numbers just don't add up. I'm missing something somewhere.

CLAPTON

you will have received a notice of coding explaining your new code: what does it say?

but if they wish to recover £856 through a taxcode for 2012-13 then they would usually change it by
856/20% = 4280

so 8105 would become 8105-4280 = 3825

however this only works for people with income above the tax allowance threshold


so what does your notice of coding actually say?

if you're not retirement age why aren't you claiming JSA?


are you sure the tax is properly owed .. if you post up your last years figures we could check them for you

Stephen_Leak

CLAPTON wrote: »

you will have received a notice of coding explaining your new code: what does it say?

but if they wish to recover £856 through a taxcode for 2012-13 then they would usually change it by
856/20% = 4280

so 8105 would become 8105-4280 = 3825

however this only works for people with income above the tax allowance threshold

so what does your notice of coding actually say?

if you're not retirement age why aren't you claiming JSA?

are you sure the tax is properly owed .. if you post up your last years figures we could check them for you

Thank you for the reply. It's obvious, when you see it. In order to repay the £856, I have to pay 20% tax on an extra £4280.

I'm not at home at the moment, but I will advise the exact code when I return. 332 and 382 do look similar.

I'm 56 and the DWP say that I have too much in savings to claim JSA. I have just over £18K in an ISA and just under £9K in an easy access account. I also had just under £8K remaining from my divorce settlement at the time I lost my job.

I used the info' here on MSE to check the P800. I entered the figures into a spreadsheet, and it was clear where the error had been made. I calculated the unpaid tax to £854. Close enough for government work, as they say.

Finding the gross amount of my BT pension could be fun. They only send the most basic of payslips when the amount paid changes by more than £1. I suppose I ought to be getting one soon, though.

agrinnall

You may have too much savings to claim income-based JSA but that shouldn't stop you from claiming contributions-based JSA. I presume you have paid NI contributions for at least the last 2 years, so you are entitled to claim for 6 months, although of course you also have to be actively seeking work to be elegible.

Stephen_Leak

Don't forget my BT pension, which is evidently more than JSA.

As I said, I was fortunate and able to save for a rainy day. I have no problem with my NI contributions going to those less fortunate than me.

jimmo

That sounds very similar to my Civil Service Pension

Mine is paid on the 2nd of the month. I didn’t get a payslip in April (final payment for 2011/12) but I will get one for 2 May. That will include the annual pension increase and the new tax code for 2012/13 so there will be a significant difference.

Also, based on what has happened before, the May payslip will have my 2011/12 form P60 on the reverse and so needs to be preserved.

Whilst I am here, in your opening post you referred to last year.

In tax terms we are now in 2012/13. Last year was 2011/12. The reason I mention this is that whilst it is not impossible, it would be extremely unusual for HMRC to have assessed last year (2011/12) by now. So your £856 underpayment could be an assessed underpayment for 2010/11 or a “Potential Underpayment” for 2011/12.

The difference may, or may not, become important but as things stand there is scope for people to misunderstand.

Stephen_Leak

I've found the spreadsheet I used to check the P800. It refers to 2010/2011. The problem was the tax on my pension from the first payment on 30 June 2010 to 31 January 2011 inclusive.

I really ought to do a worksheet for 2011/2012, in case there are any more unpleasant surprises as a result of losing my job in September.

Stephen_Leak

It's me again.

I've found the tax code notifice and the new code is 382L, as calculated above.

But ...

jimmo

Right, moving on if your gross monthly pension is £581.44, or £6976 pa the effect of code 382L will be:

Total income 2012/13 6976

Less net coding allowances 3829

Chargeable on 3147

Tax at 20% £629.40.

As you will not be liable to tax you will pay the £629.40 off the underpayment leaving £226 outstanding.

As you are happy paying by installments you may as well let sleeping dogs lie and let HMRC worry about it in due course.

Stephen_Leak

For 2011/2012, £581.44 was monthly net. Monthly gross was £726.80. Monthly tax was £145.36.

But things have changed. I lost my job on 28 September 2011. I was paid in lieu of notice until 28 November 2011.

On checking it in detail for my spreadsheet, I reckon that my ex-employer (Bristol City Council) has messed up my last payslip. The figures don't add up. I will take this up with them.

And, from my spreadsheet, I am still paying 20% on all of my pension using the BR tax code.

I've just had a pension advice for 30 April 2012 from Accenture, and it still shows the tax code as BR, not 382L. For information, my gross monthly pension has gone up to £764.59, monthly tax to £152.80 (12p out?) and monthly net is £611.79.

Should the tax code have changed to 747L and then to 382L, transferring my personal allowance, from 28 November 2011? Or don't personal allowances apply to pensions?

I'm getting more and more confused. I need some accurate information, so that I know when Accenture and HMRC misadvise me.