tax code conundrum

IFFNON050805

wondered if anyone can help with a tax code as unsure if it is correct
I had to retire early through ill health and disability I have a work pension and a private pension plus contribution based incapacity benefit, which breaks down as follows:

work annual pension £3772.56

annual private pension £342.89 ( I know a joke isn't it thought it was a joke when then told me how much as paid in £70 a month 20 odd years !)

annual contribution based incapacity benefit £5462.60

giving me a total taxable annual income of £9578.05

personal tax allowance of £9440

now in my own simple mind I feel I would be liable for tax on the difference between my tax allowance and actual income ie anything over £9440 is taxable at 20% ??

so the difference between my allowance and income is £138.05 so would it be a case of paying 20% on this amount which would equate to £27.61 tax liability ?

my problem is the tax office have given me a tax code of 363L
saying they have to deduct my entire amount of incapacity allowance from my personal allowance to be able to collect the tax on it , is this correct ??

however the note on my tax code notice informs me that any income over £69 per week will be taxed at 20% so minusing my contribution incapacity benefit as the tax office has and adding my two annual pensions together and breaking them back down to weekly amount gives me a weekly amount of £79.11, so £10.11 of this each week has to be taxed and annually that equates to £525.72 making the tax liability £105.14 at 20% if the way to work out tax on amount is to simply deduct 20% from total amount .

I know we are talking small amounts here but as my income is small
the difference is £77.53.

So just to clarify are the tax office saying I have a tax allowance of £9440 but my annual contribution incapacity benefit cannot fall within that thershold and must be taxed at 20% there fore if that is the case then 20% of £5462.60 is £1092.52 is that what I am also taxed on or is that the amount I have to pay or would it be an additional £218.50 which is 20% of the above amount?

so yes I am a bit confused any advice would be appreciated and thank for taking the time and interest to read this post

CLAPTON

which tax year is this code for?

when did you retire?

IFFNON050805

2 years ago

IFFNON050805

whoops sorry the tax code is for april 2013 to april 2014 new to forum and didn't see any replies

Dazed_and_confused

Does the tax code 363L consist of;
Allowance 9440
- incapacity benefit 5462
- allowances used elsewhere 342
= tax code 363L

If so what should happen is DHSS pay your benefit gross, you get another tax code for your private pension of 34 (T?) and your work pension will use code 363L

Your work pension payroll will pay you 3772.56 and use code 363L and deduct, in total, tax of £26.60 over the course of the whole year. This would in theory mean you "owe" about £1 which is normally ignored - what you should keep a note of is if any of the amounts you quote below change, particularly the incapacity benefit - check what DHSS are paying you every now and again to be sure that the total you receive in 13/14 is the £5462 you refer to - if you get more than this you will owe some tax as your tax code only takes account of £5462. Equally if your benefit reduces you could pay more tax during th eyear than you need to.

chrisbur

IFFNON050805 wrote: »

wondered if anyone can help with a tax code as unsure if it is correct
I had to retire early through ill health and disability I have a work pension and a private pension plus contribution based incapacity benefit, which breaks down as follows:

work annual pension £3772.56

annual private pension £342.89 ( I know a joke isn't it thought it was a joke when then told me how much as paid in £70 a month 20 odd years !)

annual contribution based incapacity benefit £5462.60

giving me a total taxable annual income of £9578.05

personal tax allowance of £9440

now in my own simple mind I feel I would be liable for tax on the difference between my tax allowance and actual income ie anything over £9440 is taxable at 20% ??

so the difference between my allowance and income is £138.05 so would it be a case of paying 20% on this amount which would equate to £27.61 tax liability ?

my problem is the tax office have given me a tax code of 363L
saying they have to deduct my entire amount of incapacity allowance from my personal allowance to be able to collect the tax on it , is this correct ??

however the note on my tax code notice informs me that any income over £69 per week will be taxed at 20% so minusing my contribution incapacity benefit as the tax office has and adding my two annual pensions together and breaking them back down to weekly amount gives me a weekly amount of £79.11, so £10.11 of this each week has to be taxed and annually that equates to £525.72 making the tax liability £105.14 at 20% if the way to work out tax on amount is to simply deduct 20% from total amount .

I know we are talking small amounts here but as my income is small
the difference is £77.53.

So just to clarify are the tax office saying I have a tax allowance of £9440 but my annual contribution incapacity benefit cannot fall within that thershold and must be taxed at 20% there fore if that is the case then 20% of £5462.60 is £1092.52 is that what I am also taxed on or is that the amount I have to pay or would it be an additional £218.50 which is 20% of the above amount?

so yes I am a bit confused any advice would be appreciated and thank for taking the time and interest to read this post

The allocation of tax codes is to split your tax due as near as possible to what is actually due, if the split is not quite right then you may pay a bit extra but if this is the case you can reclaim it.

Your tax allowance starts as 9440 and the taxable benefit is deduducted from that so 9440 less 5462 leaves 3978 so a code of 398L for other income would be expected. If the code of 363L is being used against your company pension then that would leave the rest to go againt your private pension. This would result in a very small overdeduction to claim back at the year end.

As you have not mentioned any other code I would assume that it has not arrived yet so I would check first to confirm that the 363L is being used against the company pension and then if you have not heard about the rest of the coding in a week or so check with the tax office.

IFFNON050805

thank you chris bur and dazed and confused, so from your replies I can deduce the tax code is correct and should keep an eye out for additional tax codes to come through which my work and private pension companies will use to deduct tax . thank you both for your time and advice on this

CLAPTON

what are your taxcodes for the various income for this tax year?

IFFNON050805

just got other tax codes which are BR for the small pension and 295 L for the work pension plus of course the 363L issued on my P2

Dazed_and_confused

Are BR and 295L both for this year (4/12-4/13) and if so can you confirm how much you expect to get in this (tax) year from each source of income.
Also, have you had any other income in this year? Anything paid 6/4/12 or later?

IFFNON050805

no I have been informed that no those codes given are for 2013 - 2014 tax year . but no I had no other income 2012 - 2013 tax year