Claiming ESC A19

System

jem16 wrote: »

Fair point regarding who completes the form.

However the point of completing the P46(Pen) is to alert HMRC that a pension has been started. That coupled with a P46/P45 from the new job would have been the information that HMRC would have needed to be aware that the OP had 2 incomes and that a review of the tax codes may be necessary.



As yet the OP has not told us what tax codes were given to the pension and the new job. It may be nothing to do with 2 tax-free allowances and both may have used the correct code.

In fact the OP mentions that the underpayment arose due to some income not being taxed at higher rate when it should have been. It's perfectly possible for one income to have been given the tax-free allowance and one income to be given a BR code and still give rise to an underpayment because the 2 incomes together crossed into the higher rate tax threshold.

Perhaps the OP can clarify what the 2 tax codes were?

Good point, missed that bit.

OP sounds like Jem has it right. Sorry for getting your hopes up. If the underpayment was caused by HR tax , it sounds like neither HMRC or the employer has done anything wrong.

SparkyG

jem16 wrote: »

As yet the OP has not told us what tax codes were given to the pension and the new job. It may be nothing to do with 2 tax-free allowances and both may have used the correct code.

In fact the OP mentions that the underpayment arose due to some income not being taxed at higher rate when it should have been. It's perfectly possible for one income to have been given the tax-free allowance and one income to be given a BR code and still give rise to an underpayment because the 2 incomes together crossed into the higher rate tax threshold.

Perhaps the OP can clarify what the 2 tax codes were?

As far as I can see the salaried income was given the correct personal tax allowance from the start, and the pension the BR code, until a notice of coding received in February 2010, which inexplicably changed the pension code to 647L for tax year 2010 - 2011. Looking back at pension pay advice slips since then, it appears that the personal allowance has continued to be given.

It just seems so complicated, and to be honest is getting beyond our understanding. I realise my husband made an unintentional error in not forwarding the P45 to cover his new employment with the same employer, but after that it seems mistakes have been made either by the employer or HRMC.

Edit: Sorry, gave wrong starting date in original post. He retired in October 2009 and started new employment the next day, not October 2010.

System

SparkyG wrote: »

As far as I can see the salaried income was given the correct personal tax allowance from the start, and the pension the BR code, until a notice of coding received in February 2010, which inexplicably changed the pension code to 647L for tax year 2010 - 2011. Looking back at pension pay advice slips since then, it appears that the personal allowance has continued to be given.

It just seems so complicated, and to be honest is getting beyond our understanding. I realise my husband made an unintentional error in not forwarding the P45 to cover his new employment with the same employer, but after that it seems mistakes have been made either by the employer or HRMC.

That changes things again. You say the employer gave the correct personal allowance but without a P45 or P46 they should have used code BR. Assuming they'd issued a P45 when the original job ended

Of course there could be more than one reason for the underpayment. Especially if, as you say, there was some HR tax due.

jem16

SparkyG wrote: »

Edit: Sorry, gave wrong starting date in original post. He retired in October 2009 and started new employment the next day, not October 2010.

That changes things again. You need to be sure about dates and facts for us to help.

You say the underpayment is for 2010/11 and 2011/12.

Can you please confirm what tax codes were used for both incomes in those tax years. Also what were the incomes from both his job and pension?

System

I'd better bow out at this point. Good luck to OP. Hope you get to the bottom of things.

SparkyG

jem16 wrote: »

You say the underpayment is for 2010/11 and 2011/12.

Can you please confirm what tax codes were used for both incomes in those tax years. Also what were the incomes from both his job and pension?

I have just spent all morning going through the figures as I appreciate your help, and this is what I have come up with:

Tax codes for work 2010/11

594L Apr 10-Mar 11

Tax codes for work 2011/12
694L Apr 11-Jan 12
609L Feb 12
679L Mar 12

In January 2012 my husband saw on a notice of coding that HMRC were deducting £351 from his personal allowance for a car allowance which was no longer received in new employment. He spoke to tax office about this, and they said it would be adjusted. They said the car allowance adjustment had not been made right back to Oct 2009, but looking at the tax code for 2010/11 it has been reduced by 53 from full allowance of 647, so I'm not sure about that. We trusted them at the time to work it out correctly.

Tax codes for pension 2010/11
BR Apr 10-Dec 10
679L Mar 12
398L Jan 11
647L Feb 11
647L Mar 11

Tax codes for pension 2011/12
747L Apr 11-Mar 12


Total income, work 2010/11 £26248.59

Total tax paid, work 2010/11 £4059.80


Total income, work 2011/12 £26759.15

Total tax paid, work 2011/12 £3992.00


Total pension 2010/11 £16933.87

Total tax paid, pension 2010/11 £2090.80


Total pension 2011/12 £17483.83

Total tax paid, pension 2011/12 £2001


HMRC are claiming tax underpaid 2010/11 £1136.93
2011/12 £1714.20

Total £2851.13


Hope all that makes it clearer. Thanks for your help.

jem16

SparkyG wrote: »

Tax codes for work 2010/11

594L Apr 10-Mar 11

Tax codes for work 2011/12
694L Apr 11-Jan 12
609L Feb 12
679L Mar 12

Tax codes for pension 2010/11
BR Apr 10-Dec 10
679L Mar 12
398L Jan 11
647L Feb 11
647L Mar 11

Tax codes for pension 2011/12
747L Apr 11-Mar 12

Looking at those tax codes it appears that your husband was indeed receiving his tax-free allowances twice. There was a slight crossing over into higher rate tax in 2011/12 which would have accounted for an underpayment of around £700 but no higher rate for 2010/11.

It appears that your husband's new employer has used the tax code from his old employment - that's obvious as they have used a lower tax code than normal. Now your husband did not hand in his P45 as he still has it but being the same employer they will have had the details and possibly used them.This would be fine as he probably had not yet received his pension. Could you confirm when pension actually started please?

Now initially pension used BR code which would be fine given that his main tax code was attached to his employment.

However why from January 11 was his pension tax code changed from BR to 398L and then to the normal personal allowance from Feb 11? That's where it has started to go wrong. HMRC has obviously changed the code for the pension provider but why? My guess is that they have acted on the details from your husband's P45 and taken from that that he has left employment and now only has pension income.

So that leads me to think that the new employer used the details from the P45 but did not notify HMRC that your husband had started working with them again by sending on the new details that come from Parts 2 & 3 of the P45.

I would be going down the employer error with HMRC as without using the P45 details, your employer should not have used the tax code from his previous employment.

In January 2012 my husband saw on a notice of coding that HMRC were deducting £351 from his personal allowance for a car allowance which was no longer received in new employment. He spoke to tax office about this, and they said it would be adjusted. They said the car allowance adjustment had not been made right back to Oct 2009, but looking at the tax code for 2010/11 it has been reduced by 53 from full allowance of 647, so I'm not sure about that. We trusted them at the time to work it out correctly.

It has ceratinly been reduced in both 2010/11 and 2011/12 so I would take this up with them again.

Did your husband mention during this phone call that he also had a pension as well as his employment?

Could you also clarify what tax codes are being used for 2012/13 for both pension and work?

SparkyG

Thank you for your reply.

To clarify: Up until 30/09/2009 my husband was employed as a Fire Safety Officer under operational firefighter terms and conditions (grey book). He retired on that date to draw his fire service pension. He was immediately re-employed on 01/10/2009 in exactly the same job, but on an administrative grade (green book). His pension start date is: 01/10/2009.

The tax code 2012/13 for his pension is: 810L

The tax codes 2012/13 for his work are:

April K100
May 36L
June 133L
July 133L
Aug 133L

In May 2012 he realised he wasn't claiming an allowance for laundering uniform, and informed HMRC. They responded with an amended tax code to give the tax relief for 2012/13, and also back dated relief and interest from 2008/09.

I have just noticed that the 3 part P45 in our possession is dated 26/01/2010 even though the leaving date is correctly entered as 30/09/2009. I am thinking that for whatever reason the employer has sent a full duplicate copy, and that it was correctly dealt with in the first place.

Edit: I don't think my husband did mention to the tax office during his phone call of Jan 2012 that he was receiving a pension as well as a work income. I think he assumed they already knew, as they were deducting tax from it!

jem16

SparkyG wrote: »

Thank you for your reply.

To clarify: Up until 30/09/2009 my husband was employed as a Fire Safety Officer under operational firefighter terms and conditions (grey book). He retired on that date to draw his fire service pension. He was immediately re-employed on 01/10/2009 in exactly the same job, but on an administrative grade (green book). His pension start date is: 01/10/2009.

When was the first payment actually made?

The tax code 2012/13 for his pension is: 810L

The tax codes 2012/13 for his work are:

April K100
May 36L
June 133L
July 133L
Aug 133L

Before I comment on that, could you confirm your husband's age please?

I have just noticed that the 3 part P45 in our possession is dated 26/01/2010 even though the leaving date is correctly entered as 30/09/2009. I am thinking that for whatever reason the employer has sent a full duplicate copy, and that it was correctly dealt with in the first place.

It may well have been used correctly as that is the only reason for the tax code (with the lower personal allowance), to be used.

So from pension start date and re-employment date of 1/10/09, both the pension and the employment were correctly using tax codes of BR and 594L ( I know this is not totally correct as it includes the car allowance no longer relevant but easier to ignore this for the moment). This seems to rule out employer/pension error.

For some reason in Jan/Feb 11 this all changed as far as the pension is concerned as BR was withdrawn and HMRC issued a new code. The question that needs to be asked is why? What happened at that point to see that change. It wasn't the P45 as it's dated Jan 10 so what was it?

I think this needs to be your starting point with HMRC unless you have the P2 Coding Notice that was issued with that change? If you have it what does it say?

SparkyG

The first pension payment was made on 31/10/09 as it is paid monthly.

My husband's age is 61.

The P2 coding notice changing the code to 398L is as follows:

Your personal allowance £6475
employer benefits -£1056
taxable expenses payments -£1437
a tax free amount of £3982

I have absolutely no idea what the 'employer benefits' or 'taxable expenses payments' are. It is just a pension, with no other benefits. We obviously didn't notice that at the time the P2 was sent.

The next month a new P2 was issued changing the tax code to 647L for Feb 2011. The benefits and expenses payments had disappeared!