Help for mother in law please....

hoo

Hi Guys
Everyone has been helpful so far with info for my mother in law in other aspects so hoping someone may be able to help here.

Background: MIL works seasonally but this year 2012/13 she has worked consistantly except for six weeks in jan/feb when the shop was closed but with a bit of careful budgeting and a bit of help from us she did not claim anything benefit wise. Mid part of last year the company changed owners.

MIL received a letter may 2012 from HMRC explaining that she owed £350.00 as unknown to her she had been underpaying tax. (She finally let us know this week what has happened as we could see something was really worrying her)

Since may 2012 she has been paying around £40.00 extra tax on top of her weekly wages which are about £150.00 p/w NMW for a 35-45hr week.

She has been really struggling with things and I have no probs with helping her out with money but with the tax something just doesn't sit right as with the outstanding tax and £40.00 a week extra this should have been cleared way before now?

We went with her to the tax office to try to sort it out but to be honest they weren't much help. They said that she is on a "K" tax code but that this should have changed in period 1 at the start of the new tax year in April so they will look to change this but that was about it. For some reason they thought she was getting state pension which she is not. She will be 60 this coming September.
Up until Sept 2012 she was receiving £100.00 P/W widows payment this lasted for 12 months.

Any help greatly apreciated

molerat

Bereavement allowance is taxable so perhaps that is what they had down as pension.

Full figures are needed if anyone is to help. As to the underpayment the letter received last May would have given the reason for the underpayment which may or may not be correct. Has she received her P60 for 2012-13 yet ?

jimmo

2012/13 ended on 5 April and whatever went wrong for that year can’t be fixed until she receives her P60 from her employer.

For the time being at least, she should concentrate on making sure she has the correct coding. The normal code for 2013/14 is 944L and if hers is different to that she will need to establish why.

As regards 2012/13 are you sure your figures are right?

I know she didn’t work every week of the year but £150 pw for 52 weeks is £7800 so with a standard personal allowance of 8105 there would be no tax liability.

Also £40 pw extra tax would amount to £2080- way, way above the £350 she apparently owed.

As usual with tax matters figures are vitally important so you will need to give her total earnings and tax paid in 2012/13 and the code number operated.

hoo

bit of a dumb question but what sort of figures do you need? I will call MIL tomorrow and get a better idea.

hoo

jimmo wrote: »

2012/13 ended on 5 April and whatever went wrong for that year can’t be fixed until she receives her P60 from her employer.

For the time being at least, she should concentrate on making sure she has the correct coding. The normal code for 2013/14 is 944L and if hers is different to that she will need to establish why.

As regards 2012/13 are you sure your figures are right?

I know she didn’t work every week of the year but £150 pw for 52 weeks is £7800 so with a standard personal allowance of 8105 there would be no tax liability.

Also £40 pw extra tax would amount to £2080- way, way above the £350 she apparently owed.

As usual with tax matters figures are vitally important so you will need to give her total earnings and tax paid in 2012/13 and the code number operated.

Hi thanks for the reply.
The £150.00 is after deductions.
I will speak to her tomorrow and check payslips. Things have been going wrong with other employees wages since the new people took over.

jimmo

hoo wrote: »

The £150.00 is after deductions.

Ah.

When you are dealing with tax problems the amount of take home pay is pretty meaningless. We need to know the gross wages and the tax deducted. You should also remember that National Insurance is also deducted at the same time and, whilst its just another tax, there are different rules so you can’t just lump tax and National Insurance together and hope to make sense of it.

hoo

Hi Guys,
Sorry for lateness in reply, been a busy week!! Ok, so visited MIL this evening she tells me tax code still not amended.
I have brought home all her previous payslips & letters from tax office, although she hasn't had her p60 yet.
So if someone can let me know what sort of info you need, i think I'm ready.......

Note: She did mention that when the old ownners sold up and new owners took over she got a P45- is this normal?

She's so worried about this and I just want to try and help her if I can. I know she's struggling but is too proud to ask for help.
It's so frustrating as the tax office were no help as to why the tax is coming off other than you've not paid enough...but in what way they had no answers?

mrschaucer

As Jimmo said, you need to count up all her GROSS earnings (payments from her employments without anything taken off) and all the tax she's then paid on that, plus her tax code(s), from 6/4/12 to 5/4/13. (If she got the letter from HMRC in May 2012, it might help to have the same figures for 11-12 if that was when the underpayment happened so someone could see the cause?)

hoo

mrschaucer wrote: »

As Jimmo said, you need to count up all her GROSS earnings (payments from her employments without anything taken off) and all the tax she's then paid on that, plus her tax code(s), from 6/4/12 to 5/4/13. (If she got the letter from HMRC in May 2012, it might help to have the same figures for 11-12 if that was when the underpayment happened so someone could see the cause?)

Ok MIL got her P60 today and has just called me with the details.

Pay for 2012/2013 was 13077

Tax paid from previous employment- £758.40
Tax paid from this employment- £2185.00
Total tax paid £2943.40

Tax code was/ is K160

NI
Earnings at LEL- £4066
Earnings above LEL- £1473
Earnings above the PT- £4159
Earnings above UAP- £0

xylophone

Do you have MIL's P60 for the tax year 2011-12?

Her husband died in Sept 2011 so by the time the tax year ended she had received Bereavement Benefit (about six months' worth) on top of this? Was there any other taxable income?

What exactly did the letter from HMRC in May 2012 say?
Did she receive a Notice of Coding for 2012-13? What did it show?

She received another six month's worth of bereavement benefit in the tax year 2012-13?

Any other taxable income?

hoo

The letter from 6 April 2012- 5 April 2013 says that:
Personal allowence £8105 see note 1
State pension/ benefits -£7944 see note 2
Underpayment restriction -£1776 £9720 see note 3
-£1615 see note 4

We turn £-1615 into tax code k160 and send to (her employer). They should use this code to take off the right amount of tax each time they pay you from 6 April 2012.

Note: she spoke to her payroll today about who said the tax office never told them about the new tax code. They then magically found it but said she missed the pay run to apply it so will have to wait til next week.
New tax code is 130L