Back Tax Demand

rollon65

Good evening both,


My secondary pension is indeed paid by a different provider than the others. Will give HMRC a call tomorrow re coding.
Please forgive me if it should be blindingly obvious, but if HMRC are not already recovering unpaid tax and my tax code has not changed since January 2013, then why have my pension payments reduced since 6 April 2013? Shouldn't they have remained the same in that instance?
It wouldn't result from an increase of just £15.16 every 4 weeks in my State pension? 20% of that is little more than £3.00, whereas my NET monthly pension incomes have accumulatively reduced by £24.80.


Kind regards – rollon65.

jem16

rollon65 wrote: »

My secondary pension is indeed paid by a different provider than the others. Will give HMRC a call tomorrow re coding.

Do you not have a payslip for this pension?

Please forgive me if it should be blindingly obvious, but if HMRC are not already recovering unpaid tax and my tax code has not changed since January 2013,then why have my pension payments reduced since 6 April 2013?

Your tax code has changed from January 2013 to April 2013. When I said hasn't changed from January 2013, I meant the notification from HMRC. Sorry for the confusion.

In January 2013 it was 360P and from 6th April 2013 it became 212P. The difference in those tax codes is £1480. 20% tax on this is £296 which is £24.66pm. This is why you are getting less as you have less tax-free allowances.

However as you were only notified of the underpayment in July 2013, that has not caused your tax code to change from 6th April 2013. The underpayment will be taken in tax year 2014/15 as HMRC have told you.

rollon65

Hello Jem16,

Yes - with apologies, I do mean date of retirement (or my 65th birthday).
I don't get a payslip with any of my pensions, only an annual tax deduction statement.

In January 2013 it was 360P and from 6th April 2013 it became 212P. The difference in those tax codes is £1480. 20% tax on this is £296 which is £24.66pm. This is why you are getting less as you have less tax-free allowances.

The above is where HMRC came up with their reasoning (as I see it) that I have the same (£10,500) tax-free allowance for the current tax year, but a greater proportion of my total gross income (when compared with the previous tax year when I still worked for 2 months) will be in excess of that and therefore all taxable at 20%.
Are you saying that you are still at odds with their logic?
So it looks like I shall be even worse of in the tax year 2014 - 2015 then, unless the automatic State pension indexing counters that to any degree.
By the time of tax year 2015 - 2016 when the debt will have been repaid, the cost of living will probably have risen that much that I shall feel none the richer for it!
I felt reasonably comfortable finance-wise during my first (part) year of retirement, but with the price of almost everything going skywards and my/our income going in the opposite direction, at 16-odd months on can't help feeling more than a little pessimistic about the future.

Kind regards - rollon65.

jem16

rollon65 wrote: »

I don't get a payslip with any of my pensions, only an annual tax deduction statement.

Ok fair enough. If your annual tax statement doesn't show tax of 20% of the total gross pay, then I would be worried.

The above is where HMRC came up with their reasoning (as I see it) that I have the same (£10,500) tax-free allowance for the current tax year, but a greater proportion of my total gross income (when compared with the previous tax year when I still worked for 2 months) will be in excess of that and therefore all taxable at 20%.
Are you saying that you are still at odds with their logic?

My idea of total gross income is your work pay for two months plus all your pensions for ten months. I would have thought that your gross income for pensions only, even over 12 months, would be less.

rollon65

Hello once more Jem16,

My annual tax statement does, as you say, show total gross pay and a deduction of 20%.
12 months of pension income is indeed less than 2 months employed pay plus 10 months pension income.
I guess I may have been a little clumsy in my portrayal of the fact that it is my monthly net pension income that has reduced, ie: I now receive less pension per month than I did during the last 10 months of the calendar year 2012.

Grateful thanks for all help rendered to me here. I shall call HMRC tomorrow and see what they have to say in respect of the unresolved matters you raise.

Kind regards - rollon65.

jem16

rollon65 wrote: »

My annual tax statement does, as you say, show total gross pay and a deduction of 20%.

Then it seems that code BR is being correctly applied.

I now receive less pension per month than I did during the last 10 months of the calendar year 2012.

As I explained earlier, that is because you have less tax-free allowances this tax year than at the end of last tax year.

Looking at your figures your tax code of 212P seems correct for this tax year so that should help.

What tax year is your underpayment from?

xylophone

http://www.ageuk.org.uk/money-matters/income-and-tax/tax-calculator/?stp=1
You might try the above?

rollon65

Thanks for the link xylophone - will run both our details through the calculator and see what the result is.
Very handy indeed!
Kind regards - rollon65.

rollon65

Good morning Jem16,

The tax year 2012 - 2013 is the year under scrutiny.
The subtotals include one that reads "Plus other adjustments" £15.66 and this has been added to my total income.
I suspect that this is the additional 2 months of company healthcare in that tax year (6 April 2012 - 28 May 2012), which I understand was always based on the previous years cost and then adjusted in the following year if it had increased.
Obviously, the gross total must be greater than HMRC had provided for at their preceding forecast
I had £8622 (plus the £15.66) of taxable income, for which they wanted to take £1740.06 from me. This they say, left me with £311.66 underpaid.

Kind regards - rollon65.

jem16

rollon65 wrote: »

I had £8622 (plus the £15.66) of taxable income, for which they wanted to take £1740.06 from me. This they say, left me with £311.66 underpaid.

Kind regards - rollon65.

Not quite following that calculation I'm afraid.

Your P800 calculation will show your total income for that tax year. This will be income from work ( including benefits in kind ) plus all of your pension income. It will then calculate tax owing and subtract tax already paid. This is where the underpayment will have arisen. It may not just be down to work benefits or work salary but could also have arisen from tax underpaid on your pensions when they were trying to sort out your tax codes.

Do you agree with the calculation - ie are all the figures correct?