Tax Code Change Help

ThisWayUp

Hi

I was wondering if someone could help with a tax code change. I am an employee as well as self employed. I have also tried to seek help from my accountants, however they told me not to worry about it, but something doesn't smell right.

My accountants this month have completed my self-assessment for the tax year 2011/12. My income for 2011/12 consists of £15896.86 (gross) from being an employee and received a profit of £12414 from my self-employment. I also received interest of £149 (net) and £2 (gross).

I have received a tax code change a few days ago, due to my self assessment for 2011/12. It takes away £186 and £2 from my personal allowance for this year resulting in a tax code of 791L.

In the notes, it says that since I will be paying some of my tax at 40% - they have reduced £186 (gross of £149 interest) and £2 from my personal allowance. Am I 40% tax payer? Furthermore can't they collect the extra tax through 31st January tax payment and leave my tax code alone? Previous years, they have taken any tax from gross interest from the 31st January tax payment...

If you require any further information please ask.

Murdina

The tax code change is presumably either for the current year 12/13 or next year 13/14.

If your 12/13 or 13/14 income from employment is much the same as for 11/12 then it does seem unlikely you are going to be a higher rate taxpayer. However unless money is very very tight I would be inclined to leave it since being in self assessment will mean any over (or under) payment of tax is automatically sorted out when the return goes in. This code is going to cost you maybe £6 a month at most in extra tax for now (or in 13/14) and if it is too much it will come back to you when you do your SA return.
Alternatively set aside an hour and ring HMRC on their 0845 number and ask them why they have done this. Or else ask your accountant again - but he may charge you more than HMRC.
If your employment income has gone up significantly then this may be the reason for the adjustment. Though I am not sure how HMRC could know at this stage unless your accountant has asked them to adjust the code?

jimmo

It sounds like the new coding is for the current year (8105- 188 = 7917).

If so, I reckon the adjustment will cost you about £3.13 a month (188*20% / 12).

However, if it is a normal change of code (not month1 basis) it will actually hit your next pay packet for 10 months worth, about £32.

If that is important to you, you are really going to have to act fast and contact HMRC yourself.

ThisWayUp

Hi, thanks for your help - my accountant made it out that that it was normal. Sorry for not being clear about which tax year; I assumed they could only change the present and future years coding. I will send them a letter, as I don't enjoy phoning them - though I understand it won't be till February's pay packet that things will be sorted out.