Underpaid tax

beedeedee

Ha! It looks like I've got all this to look forward to then - as I'm officially an OAP as from today.......!

Should I be scared??????

itsanne

beedeedee wrote: »

Ha! It looks like I've got all this to look forward to then - as I'm officially an OAP as from today.......!

Should I be scared??????

Be very afraid . . .

But enjoy your retirement .

zygurat789

itsanne wrote: »

They seem incapable of working anything out other than very retrospectively. Why should there be substantial underpayments every year when they have all the information and nothing changes? :mad: One person tells one thing, a second something completely different :mad:.

Sorry, rant over. I'm just not very optimistic that you'll be all sorted after the first year.

It is only possible to determine a tax liability retrospectively, especially with people born before 6 April 1948. It is up to you to inform HMRC every year of the taxable income, they do not necessarily have it and it must change every year unless your mother only has a fixed pension or annuity and no state pension and no savings.

itsanne

zygurat789 wrote: »

It is only possible to determine a tax liability retrospectively, especially with people born before 6 April 1948. It is up to you to inform HMRC every year of the taxable income, they do not necessarily have it and it must change every year unless your mother only has a fixed pension or annuity and no state pension and no savings.

She has a state pension (which had been "missed out" for years but supposedly sorted), a small work pension in her own right and a widow's pension from my father's employment. She also has an ISA and a straightforward savings account which pays tax on interest at source. None of this changes from year to year. The state pension isn't going to suddenly vanish. Everything has been declared. I don't see what's hard about the tax being paid automatically, set by Inland Revenue, to be correct rather than wrong every year :cool:.

zygurat789

itsanne wrote: »

She has a state pension (which had been "missed out" for years but supposedly sorted), a small work pension in her own right and a widow's pension from my father's employment. She also has an ISA and a straightforward savings account which pays tax on interest at source. None of this changes from year to year. The state pension isn't going to suddenly vanish. Everything has been declared. I don't see what's hard about the tax being paid automatically, set by Inland Revenue, to be correct rather than wrong every year :cool:.

The state pension changes every year, but do you still say her own pension and widow's pension don't increase. The ISA is irrelevant as it does not give rise to taxable income and the savings account changes every year. It is not the sources of income which change but the amounts received, that is what is important.
I agree with you that the state pension, once included in the computations should not be dropped, that sounds like an error but a code number would have been issued and a P2 should have been sent. It is your responsibility to check these to ensure they are correct at the time of issue, thus ensuring that an underpayment does not occur.
Does the age allowance claw-back come into your mother's calculations? If so it is absolutely impossible to calculate the tax due prior to the end of the tax year and the notification of all taxable income.

itsanne

zygurat789 wrote: »

The state pension changes every year, but do you still say her own pension and widow's pension don't increase. The ISA is irrelevant as it does not give rise to taxable income and the savings account changes every year. It is not the sources of income which change but the amounts received, that is what is important.
I agree with you that the state pension, once included in the computations should not be dropped, that sounds like an error but a code number would have been issued and a P2 should have been sent. It is your responsibility to check these to ensure they are correct at the time of issue, thus ensuring that an underpayment does not occur.
Does the age allowance claw-back come into your mother's calculations? If so it is absolutely impossible to calculate the tax due prior to the end of the tax year and the notification of all taxable income.

Yes, the claw-back operates.

Thanks for your responses - they make more sense than any official ones we've been given.

pollypenny

I don't think HMRC has any excuse.

I was sent, and duly returned, a form asking about my intentions regarding SP and retirement. This was 4 months before my 60 th birthday .

They still managed to make a pig's breakfast of it.

However, if you complain about too many people in the public sector and want redundancies you get short-staffing and errors.

agrinnall

itsanne wrote: »

She has a state pension (which had been "missed out" for years but supposedly sorted), a small work pension in her own right and a widow's pension from my father's employment. She also has an ISA and a straightforward savings account which pays tax on interest at source. None of this changes from year to year. The state pension isn't going to suddenly vanish. Everything has been declared. I don't see what's hard about the tax being paid automatically, set by Inland Revenue, to be correct rather than wrong every year :cool:.

If the non-state pensions are small then there is a good chance that the interest on the savings account should be taxed either at the reduced 10% rate or even not taxed at all if the remainder of the personal allowance after state pension isn't used up by the other pensions. I do my mum's SA online and she has had a refund for the last two years because of this, paid into her bank account within a few days of the return being submitted.

McKneff

beedeedee wrote: »

Ha! It looks like I've got all this to look forward to then - as I'm officially an OAP as from today.......!

Should I be scared??????

Happy Birthday :beer:

Most of the tax business is just fine. I retired 2 years ago in the July, waited till April, claimed a refund by telephone in May, I got my refund in June, no problem what so ever.

Enjoy your retirement....

McKneff

I don't think there is such a thing as a 10% rate now....