Tax Code BR?

joe2cool

Hi my wife is receiving a works pension & since retirement as worked full time for the past 12 yrs. August 2012 she was informed from HM R & C that she had 'underpaid' some tax. Now her tax code for the year is BR? Is this correct? On checking the website 'Revenue & Customs' it says BR is used when all income is taxed at the current rate 20% (most commonly used for a 2nd job or pension) Is this code for the calculation of the income tax chargeable?

Appreciate any help

Thx

jem16

joe2cool wrote: »

Hi my wife is receiving a works pension & since retirement as worked full time for the past 12 yrs. August 2012 she was informed from HM R & C that she had 'underpaid' some tax. Now her tax code for the year is BR? Is this correct?

Can you clarify - is your wife working as well as receiving a pension?

If she is working what tax codes have been attributed to her work and her pension?

penrhyn

If you subtract her state pension from her personal tax allowance the amount remaining is used to produce the tax code.

If the result is zero then all the private pension will be taxed.

joe2cool

Yes my wife is working whilst receiving pensions............tax codes for her work is BR & K11 for her pensions since having to pay the tax back.

Thx for your help

jem16

joe2cool wrote: »

Yes my wife is working whilst receiving pensions............tax codes for her work is BR & K11 for her pensions since having to pay the tax back.

Thx for your help

OK so her pension is using her main tax code which is presumably reduced due to the underpayment and possibly state pension - does your wife receive a state pension as well? She should have received a P2 Coding Notice to say how the code was made up. What does it say?

BR is given to her job as she is currently using her tax-free allowance on the pension.

That seems normal so far.

What caused the underpayment?

joe2cool

Underpayment, no idea their fault......so BR seems correct code at moment? Can't see a P2 Coding notice at moment........Oh! yes a state pension as well...............thx again for quick reply................appreciated

jem16

joe2cool wrote: »

Underpayment, no idea their fault.

Whose fault? You should really try to find out why and make sure it doesn't happen again.

so BR seems correct code at moment?

Only one source of income can have the tax code ( unless split in certain circumstances) so yes it appears to be correct. Whether it's the best choice of tax code depends on figures for each source of income.

Can't see a P2 Coding notice at moment........Oh! yes a state pension as well...............thx again for quick reply................appreciated

Again you should really find out how the K11 code is made up. It's a negative tax code which means that all your wife's personal allowance is used up with the deductions for the state pension and underpayment.

joe2cool

Hi thx again..........have found a break down of the tax code K11, but on the paperwork for BR there's nothing. Checking the K11, without writing everything, which seems a lot. It does say in short 'to collect the amount owed we have reduced your tax-free amount by £2791. We expect you to pay at 20% on an extra £2791.00 this year & this should collect the amount due'.

jem16

joe2cool wrote: »

Hi thx again..........have found a break down of the tax code K11, but on the paperwork for BR there's nothing.

BR doesn't need an explanation. It's simply 20% of everything and used for 2nd or more incomes.

Checking the K11, without writing everything, which seems a lot.

It will be include the personal allowance minus a deduction for state pension, minus a deduction for the underpayment.

It does say in short 'to collect the amount owed we have reduced your tax-free amount by £2791. We expect you to pay at 20% on an extra £2791.00 this year & this should collect the amount due'.

It means tax owing of £558.20 which is quite a lot. It would be a good idea to find out why.

joe2cool

That's correct, we've no idea why though..........if they say you owe this amount how can you check or differ..........just like last year my wife also had a check for paying too much?

jem16

joe2cool wrote: »

That's correct, we've no idea why though..........if they say you owe this amount how can you check or differ..........just like last year my wife also had a check for paying too much?

Multiple incomes can sometimes be tricky so it does need careful watching. You should have received the breakdown of how the underpayment came about. If you haven't then ask HMRC to explain it.

If you want to give figures of your wife's works pension, state pension and job we might be able to help with suggestions on how to try and avoid overpayments/underpayments.