Income tax

Thor2012

I receive my personal allowance on income from a works pension £15000pa, I also have a full job £35000pa and I am paying the income tax using the BR code. I have just received a letter form the Tax Office and I have not paid enough income tax for 2012-13. Is there a better way for me to pay my income tax?

xylophone

http://www.hmrc.gov.uk/incometax/check-multiple-codes.htm

Pay into a pension to obtain 40% tax relief?
https://www.smith.williamson.co.uk/news/6160-thousands-of-people-fail-to-claim-tax-relief-on-pension-contributions-5-april-2013-is-cut-off-date-for-claims-for-the-tax-year-2008-09
http://www.telegraph.co.uk/finance/personalfinance/consumertips/tax/9902367/How-to-boost-your-pension-with-tax-tricks.html

IainHL

I would suggest you write to HMRC giving them the full details of your pension and job (including the companies tax references), and how much you anticipate earning from each source of income over the tax year.

They will then be able to work out a revised tax code (less than 944L) for your pension provider to use that should result in you paying the correct amount of tax over the course of the tax year.

00ec25

IainHL wrote: »

I would suggest you write to HMRC giving them the full details of your pension and job (including the companies tax references), and how much you anticipate earning from each source of income over the tax year.

They will then be able to work out a revised tax code (less than 944L) for your pension provider to use that should result in you paying the correct amount of tax over the course of the tax year.

errr... the problem the OP has is that the pension is much more than the PA, so splitting the PA is pointless

the underpayment is caused by the fact the OP is into 40% tax bracket but is only paying tax at 20% (BR) on the earned income thus causing the underpayment. OP needs to ask for tax code on earned income to be changed from BR to 0T

System

00ec25 wrote: »

errr... the problem the OP has is that the pension is much more than the PA, so splitting the PA is pointless

the underpayment is caused by the fact the OP is into 40% tax bracket but is only paying tax at 20% (BR) on the earned income thus causing the underpayment. OP needs to ask for tax code on earned income to be changed from BR to 0T

I don't think the other poster is suggesting splitting the allowance rather advising the OP to let HMRC have an accurate estimate for the 2013/2014 income so that they can issue a code to the pension provider with a higher rate restriction in it.

chrisbur

00ec25 wrote: »

the underpayment is caused by the fact the OP is into 40% tax bracket but is only paying tax at 20% (BR) on the earned income thus causing the underpayment. OP needs to ask for tax code on earned income to be changed from BR to 0T

This would still result in an underpayment of tax as the 0T code would use up all of the 20% tax allowance and yet the 944L on the pension would also use about £5500 of 20% allowance.
There is no easy answer to this nothing is going to give you an exactly correct figure. As IanHL says if you know exactly what you will get then if they are willing the tax office could work out a code that would deduct the correct amount but if the earnings vary then there will be an over or under deduction of tax. Also would have to be recalculated for the yearly tax code and band adjustments. Or you could go for paying tax at 40% on all the pension and then you would know that you have either paid correctly or overpaid and will get some back in the new tax year rather than paying some.

I personally would leave it as it is but just remember that you will have to pay some more tax later. You could work out the tax due on the combined income each month and you would know what your extra tax debt would be as the year progressed.