Tax refund now I've retired

jem16

John_Pierpoint wrote: »

Provided you have any PAYE income you can be issued with a "K" code.
This is a sort of negative personal allowance that can help itself to up to 50% of anything your pension provider sends you.

The K code will not help in this situation and the OP would never be given a K code. Basically the K code comes about where the deductions are greater than the allowances. In this case the £100 owing would mean a deduction of £500. With next year's personal tax-free allowance likely to be £10,000, the deduction of £500 would see an allowance of £9500 and a tax code of 950L.

Unless the OP's pension is greater than £9.5k, no tax will be collected from the pension.

jem16

moneyistooshorttomention wrote: »

So, I guess I sit back and wait for them either to do this K code thing on me and my pension provider will hand over this money prior to my being paid it or they send me one of these so-called "Voluntary Payment" forms. Either way, it happens at some point 2014 probably and I have no option but to hand over the cash.

I can't see how it will be possible for HMRC to collect via your tax code unless your pension income will be £10k or more which you seem to imply it will not.

In this case you will have to pay it in a lump sum and they will not usually wait until 2014 to collect it.

I suggest you contact HMRC and make arrangements to pay it in some way or another other than through your tax code.

John_Pierpoint

feb06 from HMRC P2(new) PAYE Coding Notice

Dear Mr Dog

Your tax code for the year 6th April 2006 to 5th April 2007 is K374

===================================================

Apr07 from pension payment company P60 (substitute).

To the Annuitant:

Gross Annuity 1059.80
Tax deducted 529.90

Tax code K374

jem16

John_Pierpoint wrote: »

feb06 from HMRC P2(new) PAYE Coding Notice

Dear Mr Dog

Your tax code for the year 6th April 2006 to 5th April 2007 is K374

===================================================

Apr07 from pension payment company P60 (substitute).

To the Annuitant:

Gross Annuity 1059.80
Tax deducted 529.90

Tax code K374

Sorry but I'm not sure what point you're trying to make here?

I'm not saying a K code doesn't exist as of course it does. I am saying that the OP will probably not be given a K code as his allowances and deductions do not warrant it.

How was the K374 tax code made up? You will find that it's the personal tax free allowance for 2006/7 minus deductions for things like state pension and underpaid tax.

If the OP would provide some more details such as whether or not there is a state pension involved and how much that is, I could be more precise on the likely tax code.

John_Pierpoint

The state pension just about cancelled out the personal allowance.. The deceased has worked with no period of unemployment on an increasingly well paid "craft" job from the age of 14 until his retirement aged well into his 70s, with a 4 - 5 year foreign paid "holiday" in the first half of the 1940s. The unpaid tax was a small amount of untaxed annual interest and an (increasing) backlog of underpaid tax from former years.

I never did manage to get to the bottom of what was going on - not sure if the deceased was being a clever old sweat and muttering "those b*gg*rs pushing pens aren't getting any more of my money if I can help it" or if he was just befuddled by the increasing complexity of our income tax system.

It is a rather sad comment on our present society that the dying words of someone who had been through two world wars should be "....can you help me with my tax return".

His method seemed to be working out his income and tax for year A and then scrubbing out the numbers and substituting year B etc - only trouble was I had missing back up and could not work out which year was which.
Got the last 18 months right thought.

As it was a time of total chaos at HMRC, I thought I would let sleeping dogs lie or I would never finalise the estate valuation.

moneyistooshorttomention

jem16 wrote: »

Sorry but I'm not sure what point you're trying to make here?

I'm not saying a K code doesn't exist as of course it does. I am saying that the OP will probably not be given a K code as his allowances and deductions do not warrant it.

How was the K374 tax code made up? You will find that it's the personal tax free allowance for 2006/7 minus deductions for things like state pension and underpaid tax.

If the OP would provide some more details such as whether or not there is a state pension involved and how much that is, I could be more precise on the likely tax code.

Just seen this.

My income is purely a work pension at present and is approx. £8,000pa. I have not yet reached my (revised) State Pension Age, but retired because I had reached my Retirement Age iyswim (being a woman).

I am rather interpreting the last few posts on this thread as meaning that maybe I don't have to pay this tax bill ever (either via my code or via paying a lump sum). Don't know if I am interpreting aright though? (NB: HMRC are obviously hoping for a lump sum by the look of it, as they have recently sent me a form to pay one).

Once the rest of my pension starts (ie my State Pension starts as well) then my income will be back to high enough to tax again.

jem16

moneyistooshorttomention wrote: »

I am rather interpreting the last few posts on this thread as meaning that maybe I don't have to pay this tax bill ever (either via my code or via paying a lump sum). Don't know if I am interpreting aright though? (NB: HMRC are obviously hoping for a lump sum by the look of it, as they have recently sent me a form to pay one).

No you are not interpreting it correctly. The money is owed and you will have to pay it. John was suggesting that the underpaid tax could be collected by using a K code. I said that your circumstances wouldn't see a K code being issued as that only comes about when your deductions are higher than your allowances. In your case that is not true.

HMRC have obviously now realised that they cannot collect via your tax code as your current earnings are too low. They are expecting you to pay it in a lump sum. If this will cause you hardship you should phone HMRC and explain that it would cause you hardship and arrange for a repayment plan.

Don't just ignore it as it won't go away and you may end up with fines.

Once the rest of my pension starts (ie my State Pension starts as well) then my income will be back to high enough to tax again.

When is your state pension due to start?

EDIT : I'm assuming that you have checked the calculation for the underpayment of tax and are sure it's correct?

moneyistooshorttomention

Oh well...looks like I have no option but to pay it then (through firmly gritted teeth:cool:).

Darn it.

I have checked the calculation and it looks accurate unfortunately.

My State Pension isn't due for some time yet (so not this tax year or next).

Never mind....

Thank you everybody anyway.

Gizasmum

Moneystooshorttomention, perhaps you could put some money away in preparation for when you have to pay HMRC back.

I have two occupational pensions and received notice in June of a tax underpayment in 2012/13 of around £240. Basically too much allowance was going to the lower of my pensions, so each year I would end up paying too much tax against the higher one and receive a balancing refund against the lower one. I decided to rectify this and requested HMRC change the allowances to suit. Unfortunately the lower pension provider didn't react quickly enough, which resulted in the underpayment.

HMRC have advised that this won't be deducted, via my tax allowance, until 2014/15 tax year. Although I will receive £20 less each month in 2014/15, at least this period of notice allows me to plan for that by putting some money away in the current tax year, which I think is perfectly fair.

Since I don't see why your situation should dealt with any differently from mine, perhaps you could ask HMRC to delay your repayment until 2014/15, and also that they spread it over the 12 months of that tax year. Good luck!

jem16

kteirvine wrote: »

Since I don't see why your situation should dealt with any differently from mine, perhaps you could ask HMRC to delay your repayment until 2014/15, and also that they spread it over the 12 months of that tax year. Good luck!

The difference is that the OP does not currently earn enough to pay any tax so the underpayment cannot be taken that way.

The way yours is being done is standard practice for those earning enough.