Am I paying the correct amount of tax?

Sofie

Please can I ask for some tax advice?

I am working full time but am over 60 and receive the following:
State pension x £738 per month
Private pension x £91 per month
Small private pension (290 per year)

I'm currently on a tax code of K159 NONCU and pay £411 per month in tax which seems high to me. Is it correct?

Thanks
Sofie

jem16

You haven't given us enough information to go on at all.

Basically a K159 code is a negative tax code meaning you have no personal allowance and pay tax on an extra £1590 of income.

Perhaps give us some extra information to work on;

What age are you - ie over 65 and currently entitled to the higher personal allowance?

Your 2 private pensions - do they each receive a separate tax code or are they coded into the K159 code along with the state pension? If they have separate tax codes what are they?

What gross payment do you receive that the £411 tax comes off?

Sofie

No I don't receive any more than stated in previous post.

My pay is £1520 after taxer month.

My last P60 says that for 2011/12 my pay is £23378 and tax deducted was £4887.60.

I'm 61.

The private pension has a code of BR M1

Thanks
Sofie

jem16

Sofie wrote: »

My pay is £1520 after taxer month.

Really need the gross amount - ie before tax and NI is taken off.

My last P60 says that for 2011/12 my pay is £23378 and tax deducted was £4887.60.

What was your tax code for 2011/12?

I'm 61.

Ok so personal allowance is £8105. From that they will take the state pension of £8856 so giving a minus £751. This would give a K75 code so something else is being coded out here too.

What does your P2 coding notice say about how the K159 code is made up?

The private pension has a code of BR M1

Which one? I assume the £91pm pension?

What about the 2nd private pension?

Sorry about all the questions but tax is all about the detail.

System

State Pension is paid weekly, four weekly or quarterly rather than monthly.

Is it possible the figure you've quoted is the four-weekly one. If so this would give a negative allowance of £8105 - £9594 (£738 x 13) = -1489.

Sofie

Thanks Jem16.

Gross is 2016.67 per month.

Yes the private pension is the £91 per month one.

The P60 says the final tax code is 159 M1.

I can't lay my hands on the small one at the moment but as it's under £300 per annum, I doubt it will make a huge difference.

The £1590 you mention is a bit worrying as I have given all my income so this amount is something extra I don't know anything about..

Thanks
Sofie

Sofie

Yes Ceiburman, it's paid every four weeks. Sorry I forgot about that.

jem16

Sofie wrote: »

Thanks Jem16.

Gross is 2016.67 per month.

Ok with that gross and K159 tax code you should be paying £429.83 in tax each month. You are only paying £411pm which is less. Are you paying into a pension through your work?

The P60 says the final tax code is 159 M1.

You are missing an important bit - ie is it K159 M1 or 159L M1.

I can't lay my hands on the small one at the moment but as it's under £300 per annum, I doubt it will make a huge difference.

Not a huge difference but enough to possibly make the tax code different.

The £1590 you mention is a bit worrying as I have given all my income so this amount is something extra I don't know anything about..

It's not income - it's to do with the way your tax is worked out.

Basically everyone under 65 currently has a tax free personal allowance of £8105.

As your state pension is paid gross but is taxable income, the tax due on it has to be collected via the tax code for your work. So what they do is give you your tax free allowance of £8105 and deduct the amount of the state pension which in your case is £9594 This gives a negative figure of minus £1489 which would normally see a tax code of K148 - you simply drop the last figure.

In your case the tax code of K159 equates to a minus £1595 as opposed to the £1489 figure we just calculated. So approximately another £106 is being deducted from your tax code. This might be an underpayment from last year.

Your P60 shows tax of £4887.60 from a gross of £23,378. With a tax code of K159 you would see tax of £4993.60 so an uderpayment of £106 so it seems that this is being coded out for this year.

Your tax code appears to be spot on for this tax year provided that your small private pension of £300pa is on a BR tax code.

So can't see much wrong except for paying a bit less tax than your gross figure would expect. Perhaps when you answer the question about paying into a pension it will be clearer.

System

It looks like your 2011-12 code is about right, if the figures in the original post are the current rates. To check it the calculation would be

Tax allowance 7475 - (13 x pre-April 4-weekly pension)

don't forget the tax deducted from your pay covers both your earnings and your state pension.

Sofie

Thanks very much Ceiberman

It's K159 M1.

Yes the pension is an NHS one through work.

Sofie

jem16

Sofie wrote: »

Yes the pension is an NHS one through work.

Which you are currently paying into?

If so that will account for the reduced tax as the NHS pension is piad from gross salary before tax is paid.

How much do you pay into it?