Change tax code help! Benefits.

Duskylady

Hi.

Am in a bit of a tiz about this and can't find any answers on the hmrc website.

I have never filled in a tax return before have always paid through PAYE.
A few weeks ago I received a p11d form from my employer stating that I received 2500 in benefits in 2012-13. Tbh I didn't give it much thought and didn't really read the letter. Though looking at it now it looks like its for a computer and private medical insurance.

I've now had a letter from hmrc saying I have underpayed tax of 1000 for the same tax year and my tax code will be lowered to 693L for next year :eek::eek::eek:

I can't believe to is right surely if its true there is no point in getting any benefits through work I might as well just get paid in cash.

This is the first year I've received a p11d form and am also now worried about tax liabilities for previous years I have had private medical insurance for 4 years and had another computer about 2 years ago can I be chased for these years too.

Also the computers were advertised through my (very large) company as being a tax efficient way to by a computer clearly this is not the case now.

My questions I guess are as follows

1 is this driven by a change in the rules or should I have had a different tax code in previous years.
2 Linked to above am I also liable for previous years tax linked to other benefits.
3 can I get my tax code increased as I'm obviously now not going to buy another computer through the work scheme so would not have that in 2013-14 or will I have to claim the tax back at the end of 2014.


We are just about to exchange on a house, are a single income household and this is making me panic. I have no idea what this will do to my pay and budgets for the next year.

WestonDave

1. Yes - private medical cover has always been a taxable benefit and you should have had a P11D for that period. However you should also know what your premiums were and £2500 for private medical and a computer seems high (unless its also covering family) so its possible there is a catch up of previous all in one year. Worth checking with your medical provider what your annual premium is and seeing how that compares.
2. Yes - but see above. If they've forgotten to put your P11D through previously they may be catching it all up now, or if they've given them to you previously HMRC may not have picked it up previously in which case you might get away with it or they may pick it up. As above first place to start is working out what your annual premium and the computer benefit is so you know if £2500 is one years worth or backlog.
3. In theory yes you can get the computer taken out, however its worth finding out as above so you know what the ongoing annual amount of medical and computer is. Once that is known you can talk to the tax office about getting the coding right. However that assumes they want the £1000 directly and its not a case of coding this to collect monthly as arrears. In theory you should be paying the £1000 plus something each month on account of anticipated tax on this years costs. For example I started private cover in March so I got a bill for £80 on the one payment the company had paid, and this carried forward into my coding for this year.

nomunnofun

Duskylady wrote: »

Hi.

Am in a bit of a tiz about this and can't find any answers on the hmrc website.

I have never filled in a tax return before have always paid through PAYE.
A few weeks ago I received a p11d form from my employer stating that I received 2500 in benefits in 2012-13. Tbh I didn't give it much thought and didn't really read the letter. Though looking at it now it looks like its for a computer and private medical insurance.

I've now had a letter from hmrc saying I have underpayed tax of 1000 for the same tax year and my tax code will be lowered to 693L for next year :eek::eek::eek:

I can't believe to is right surely if its true there is no point in getting any benefits through work I might as well just get paid in cash.

This is the first year I've received a p11d form and am also now worried about tax liabilities for previous years I have had private medical insurance for 4 years and had another computer about 2 years ago can I be chased for these years too.

Also the computers were advertised through my (very large) company as being a tax efficient way to by a computer clearly this is not the case now.

My questions I guess are as follows

1 is this driven by a change in the rules or should I have had a different tax code in previous years.
2 Linked to above am I also liable for previous years tax linked to other benefits.
3 can I get my tax code increased as I'm obviously now not going to buy another computer through the work scheme so would not have that in 2013-14 or will I have to claim the tax back at the end of 2014.


We are just about to exchange on a house, are a single income household and this is making me panic. I have no idea what this will do to my pay and budgets for the next year.

Presumably you are a 40% taxpayer as the tax due on a BIK of £2500 is £1000.

You need to advise HMRC that the computer benefit is a one-off and have that removed from your tax code.

You need to decide whether obtaining medical insurance which only costs you the tax due on it (effectively a 60% discount) is worthwhile - seems a good deal to me.

xylophone

And have you looked at reducing taxable income through additional pension payments?

Duskylady

nomunnofun wrote: »

You need to decide whether obtaining medical insurance which only costs you the tax due on it (effectively a 60% discount) is worthwhile - seems a good deal to me.

I pay for the medical cover out of my gross salary, £105 per month, I thought (stupidly) that this was a good deal as was saving 40% however if I understand it this right now might as well be net? It does cover my whole family 2 adults 2children but still might be worth looking into getting it cheaper elsewhere.

Thanks for your replies so far. I will contact the hmrc to see if I can increase the code to ignore the computer for next year.

nomunnofun

Duskylady wrote: »

I pay for the medical cover out of my gross salary, £105 per month, I thought (stupidly) that this was a good deal as was saving 40% however if I understand it this right now might as well be net? It does cover my whole family 2 adults 2children but still might be worth looking into getting it cheaper elsewhere.

Thanks for your replies so far. I will contact the hmrc to see if I can increase the code to ignore the computer for next year.

Now I am confused! I doubt now that the BIK was medical insurance as you would be paying tax twice for it. How much was the computer worth at the time of provision?

p00hsticks

Duskylady wrote: »

I pay for the medical cover out of my gross salary, £105 per month, I thought (stupidly) that this was a good deal as was saving 40% however if I understand it this right now might as well be net? It does cover my whole family 2 adults 2children but still might be worth looking into getting it cheaper elsewhere.

This doesn't make sense to me - I'm no expert but I get medical benefits from employment myself and it's definitely a taxable benefit (but no need to pay NI on it).

I used to get cover as a 'benefit in kind' - nothing got taken out of my salary as my employer paid for it, but the value was documented on the P11 D I got at the end of the year and HMRC then adjusted my tax code for the following year.

The company then switched to a salary sacrifice scheme, where instead of the company paying directly for the medical cover, they adjusted my salary upwards slightly and I now pay for it out of my (taxable) salary each month. I no longer get a P11D and there's no longer any adjustment to my tax code.

You sound as if you are somehow somewhere between the two systems, which is confusing.

By the by, even paying the tax on the benefit, you may well still find it the cheapest way to get medical cover, as you say your work for a very large comany who will hopefully have been able to negotiate very good prices with the medical cover provider, better than you can get as an individual.