Tax Demand for pensioner

antdon

Hello All
A friend of mine is 78 and is part retired. He works approx. 6 months every year. And pays paye via our company on a weekly basis.
He has just recieved a demand for £2123 for underpaid tax...
He recieved a similar demand last year for approx £1800 but upon contacting the taxman hes was told 'dont worry about it, we will adjust your tax code for the following year....'

The tax is taken by our employer for the periods that he works (random)
How can he owe so much?
What should he do?
If he didnt work at all next year how would they take the money from him????

Any advice would be very gratefully recieved....

molerat

Is his tax code correct, has his state pension amount been deducted from his allowance ? Without figures no one can really help. If he owes money and does not work he will get sent a demand for payment.

CLAPTON

antdon wrote: »

Hello All
A friend of mine is 78 and is part retired. He works approx. 6 months every year. And pays paye via our company on a weekly basis.
He has just recieved a demand for £2123 for underpaid tax...
He recieved a similar demand last year for approx £1800 but upon contacting the taxman hes was told 'dont worry about it, we will adjust your tax code for the following year....'

The tax is taken by our employer for the periods that he works (random)
How can he owe so much?
What should he do?
If he didnt work at all next year how would they take the money from him????

Any advice would be very gratefully recieved....

tax is all about detail;
really need the most basic facts like his incomes and the tax paid
taxcodes would be good too

antdon

Thanks for the reply...

He is bringing some detail into work tomorrow....

But my question was more general.

Lets say they adjust his tax code for next year... and he does no paid work... How will they get their tax?

They apparently said that they had not taken his pension into account when they gave him a tax code a few years back..
But if they adjusted his code then, how can he be getting more into debt with them.....

I do realise that tax ix very complicated... But, he is 78 and this is baffling him.... (and me)

CLAPTON

given the facts tax is quite straight forward but here we don't know any facts

but lets say some was receiving 5000 per annmum state pension

and they were also working and receiving sufficient to use up their personal allowance (whatever that may be)
then they would owe 20% or 40% or 50% of 5000 (depending upon their tax rate ) on their state pension

now if HMRC decided to collect the back tax by altering their following years tax code but then that person had only their state pension for income then of course the back tax wouldn't be collected and it would still be owed

we could go on for ever but the facts would be good

-state pension for 2011-12
-earned income for 2011-12
-tax deducted from earned income
-tax code for earned income (all from P60)
-any other pension (private) or any other income interest, divis?

xylophone

Lets say they adjust his tax code for next year... and he does no paid work... How will they get their tax?

If he has a pension other than his state pension (does he, by the way?) they might adjust the code on that - otherwise they'd issue a tax demand I should think.
http://www.litrg.org.uk/low-income-workers/employed/paye-underpayments-2011-help-for-you
http://www.hmrc.gov.uk/pensioners/pension.htm

antdon

Many thanks for all the replies...

I will get back to you if he brings in enough info tomorrow....