Strange tax code?

Loz01

Sorry if this is the wrong forum or place.

My mum is 62 and works full time. Her tax code has changed a lot, I think, because she got her state pension. It has changed loads of times from 91L then 697L then 122L, then replaced by 121L then 810L!!!

Basically her one at the moment is 186LM1 whatever that means :eek: she hasn't changed jobs in this whole time.

Is she on emergency tax? She doesn't pay NI as she's a pensioner now but she earns roughly 1600 a month and is paying 300 in tax.

Any advice is welcome at this point!!

CLAPTON

when did she start to receive the state pension?
how much does she receive?

did she receive a notice of coding when the code changed?

anamenottaken

I've had fluctuating tax codes too since state retirement age.

The changes probably relate to any pensions she has been receiving. The state pension is paid gross but is taxable. Other pensions are taxable and should be taxed at source if HMRC instruct the pension provider but there is often a delay and complications for higher rate tax payers.

They are probably trying to recover under-payment from previous year(s).

So answering Clapton's question about state pension is likely to move you in the right direction to getting an answer. She also needs to look at what is happening in relation to tax of any other pension.

Look out for P800 correspondence from HMRC. It should be issued when tax codes like you describe are effected (though employers may receive notification ahead of the tax payer).

jem16

Loz01 wrote: »

Basically her one at the moment is 186LM1 whatever that means :eek: she hasn't changed jobs in this whole time.

It means that she has a personal tax-free allowance of £1860 and the tax code is being operated on a Mth1 basis. A Mth1 one basis means that each month is looked at separately and not cumulatively as a tax code would normally operate to ensure the correct tax is paid at the end of the tax year.

A change to a MTh1 tax code is probably the result of a change in tax code which, if operated cumulatively, would see a larger than normal amount of tax being taken in one go. It's likely that at the end of the tax year your Mum will have underpaid tax.

The reason for all these changes has probably been because of her starting to receive the state pension. As Clapton has asked how much does she receive? This amount is then deducted from her personal allowance to give a new tax code. For example this year's allowance is £9440. If your Mum received £5000 in state pension this would reduce her allowance to £4440 and result in a tax code of 444L.

Is she on emergency tax? She doesn't pay NI as she's a pensioner now but she earns roughly 1600 a month and is paying 300 in tax.

No it's not the emergency tax code. That would be 944L Mth1 for this tax year. She should also have received a P2 Coding Notice from HMRC which would have explained how the tax code was made up. More than likely though is that some, or all of it is a deduction for the state pension.

Loz01

CLAPTON wrote: »

when did she start to receive the state pension?
how much does she receive?

did she receive a notice of coding when the code changed?

She started getting it in March after her birthday and I'm not completely sure on the figure but I think she receives just over £100 a week so maybe £420 ish a month? I will double check this tomorrow.

She's had several letters every time it's been changed but she's been confused by personal allowances and why they've changed it so much! She got told the amount she could earn tax free had gone up but I think the new tax code just took the trophy for being the most confusing. :rotfl:

Loz01

jem16 wrote: »

It means that she has a personal tax-free allowance of £1860 and the tax code is being operated on a Mth1 basis. A Mth1 one basis means that each month is looked at separately and not cumulatively as a tax code would normally operate to ensure the correct tax is paid at the end of the tax year.

A change to a MTh1 tax code is probably the result of a change in tax code which, if operated cumulatively, would see a larger than normal amount of tax being taken in one go. It's likely that at the end of the tax year your Mum will have underpaid tax.

The reason for all these changes has probably been because of her starting to receive the state pension. As Clapton has asked how much does she receive? This amount is then deducted from her personal allowance to give a new tax code. For example this year's allowance is £9440. If your Mum received £5000 in state pension this would reduce her allowance to £4440 and result in a tax code of 444L.



No it's not the emergency tax code. That would be 944L Mth1 for this tax year. She should also have received a P2 Coding Notice from HMRC which would have explained how the tax code was made up. More than likely though is that some, or all of it is a deduction for the state pension.

Thank you very much this explains it much better in my mind! I thought it was something to do with her pension being taxable but just the frequency of them changing was the confusing part as her pension is a set amount every month and hasn't changed since she started receiving it.

xylophone

She received some State Pension in the tax year 2012-13 - was an adjustment to her code in the current tax year required because of this?

CLAPTON

impossible to say from the info so far

really need more complete details:

100 a week state pension would lead to a tax allowance adjusted from 9445 to 9445 - 5200 i.e. about 4445

if she only receive state pension for a month last year that would mean she owed only 20% of say 400 i.e. £80


so at worst her allowance would be around 4,245 and coded 424L and no need of a M1

but need the full details


or maybe phone HMRC and ask them to sort it all out.

Loz01

CLAPTON wrote: »

impossible to say from the info so far

really need more complete details:

100 a week state pension would lead to a tax allowance adjusted from 9445 to 9445 - 5200 i.e. about 4445

if she only receive state pension for a month last year that would mean she owed only 20% of say 400 i.e. £80


so at worst her allowance would be around 4,245 and coded 424L and no need of a M1

but need the full details


or maybe phone HMRC and ask them to sort it all out.

I'm so sorry this is the latest reply ever

Her pension started in March 2012 so it was one months in the 'old' tax year then it April I guess it went to a new year. She is 62 but I'm 99% sure she only started getting it from aged 61 because that was when her was calculated state pension age. I remember her being 60 and saying how she wasn't getting it til her 61st birthday. She was born in 1951 if that helps.

Her pension is £110 a week so it would be roughly £5200 a year which probs explains the adjustment on her code.

But her state pension is a set amount so surely the M1 thing isn't needed? As they can project ahead and see what she's going to receive.

What confuses her is the numbers - 186? Does that mean £1860? Or 18 thousand??? :rotfl:

CLAPTON

186L mean a tax free allowance of 1860 per annum

she needs to phone HMRC and explain

-she has the state pension
-and a job
and no other income

and that she thinks her taxcode is incorrect


she needs to have her pension and employment details to hand

Loz01

So if the tax free allowance is 9 thousand a year why is she only allowed to earn 1 thousand?? Or is that 1860 added to the tax free allowance? Even though she doesn't pay NI now because she's a pensioner she still feel like she's paying loads of tax. I've insisted she phones them with all her pension and work info so she's going to tomorrow. She only earns 15,000 a year in a job so it's not exactly high paying.

Thank you all for info and help, v.appreciated