Back Tax Demand

jennifernil

I think jem has almost got you sorted out now!

Tax codes will never be 100% correct when you have several income sources, you need to add ALL your income together and work it out, that is what HMRC are doing now.

As state pensions increase every year, your tax code on your main pension should change to reflect this, so be sure to check that happens, otherwise you could get another underpayment.

zygurat789

jennifernil wrote: »

I think jem has almost got you sorted out now!

Tax codes will never be 100% correct when you have several income sources, you need to add ALL your income together and work it out, that is what HMRC are doing now.

As state pensions increase every year, your tax code on your main pension should change to reflect this, so be sure to check that happens, otherwise you could get another underpayment.

Each year (apart from the next one or two) your personal allowance should increase so that the net changr will be fairly negligible.

rollon65

Hello Jem16 / All,

Sorry not to have been back here earlier - been enjoying an unplanned day out with our grandchildren due teachers strike.

Best you see the content of my "P800T" methinks but not at all sure a posting will preserve the tabs!? [AND IT DIDN'T!!!] Hope you can work with that?

PAYE Income Income £12151 Tax paid £1428.40
State Pension/State Benefits £6820 Tax paid £0.00
Medical Insurance Payments £151 Tax paid £0.00

Totals £19122 Tax paid £1428.40

Your income after taking away deductions £19122

Personal Allowance £10500

Less Total Tax Allowances £10500

Income Tax is chargeable on this amount £8622

Tax on £8622 is:
Basic rate at 20% on £8622 = Tax paid £1724.40

B Tax chargeable = £1724.40

Plus other adjustments £15.66

C Plus Total adjustments £15.66

D Tax payable (B plus C) £1740.06

Tax underpaid (D minus A) £311.66

Tax underpaid £311.66

Kind regards - rollon65.

rollon65

Hello again All,

Changing the subject back to my wife's tax issues.
She rang HMRC today and specifically asked to speak to a supervisor on the grounds of the multiple shades of opinion she had been met with until now.
Her P800 has been declared a "basket case" and will be recalculated.
This won't mean that she will not have to pay something back, but there is the hint that the basic income tax calculation is flawed, so fingers crossed on that one.

zygurat789: Sorry - can't get my head around "Each year (apart from the next one or two) your personal allowance should increase so that the net changr will be fairly negligible".
I understood that OAP State Pension allowances will be pegged, until that for those who work catches up. Am I wrong about that?

jennifernil: Intend to do just as you say, thank you, using the Age UK calculator that xylophone offered. Appreciate that OAP State Pensions should increase every year, but not sure that allowances will as my current allowance would appear to have been taxed (give it with the one hand and take it away with the other!).
When will our politicians get it that if they allow us the cash, we will spend it in the economy? This in turn creates both demand and jobs, which is good for all of us. If you take away my bus pass, I will not be able to afford to visit the shops in order to do that though!

All contributions sincerely appreciated, I do assure you.

Kind regards - rollon65 (wow! has it been that long - I'm 66 now?)

zygurat789

rollon65 wrote: »

Hello again All,


zygurat789: Sorry - can't get my head around "Each year (apart from the next one or two) your personal allowance should increase so that the net changr will be fairly negligible".
I understood that OAP State Pension allowances will be pegged, until that for those who work catches up. Am I wrong about that?


All contributions sincerely appreciated, I do assure you.

Kind regards - rollon65 (wow! has it been that long - I'm 66 now?)

The older you become the faster the years pass.
There is no such thing as an OAP state pension (viz) allowance.

George Osborne, goaded by Nick Clegg decreed that the pensioner on anything over £10,500 should pay tax in future. To achieve this the age allowance, the amount someone born before 6 April 1948 can earn before paying tax was frozen. This amount will not increase until the personal allowance, the same thing for those born after 6/4/48, exceeds £10,500.
The personal allowance is now £9,440 so it may exceed the £10,500 this budget or next. Hence the standstill for one or two years.
When this happens age allowance will be dead and we will all have a personal allowance which almost invariably increases each year.
So each year you will be able to earn a little more before you pay tax and each year you will earn a little more as the pension increases, the net result should be very small.

rollon65

Many thanks for the clarification zygurat789 , appreciate what you say - all we need is a mechanism to peg prices in the shops, for power and fuel . . . (zzzzzzzzz . . . sorry, I nodded off and must have been dreaming!)

All the best - rollon65

jem16

rollon65 wrote: »

Hello Jem16 / All,

Sorry not to have been back here earlier - been enjoying an unplanned day out with our grandchildren due teachers strike.

Best you see the content of my "P800T" methinks but not at all sure a posting will preserve the tabs!? [AND IT DIDN'T!!!] Hope you can work with that?

PAYE Income Income £12151 Tax paid £1428.40
State Pension/State Benefits £6820 Tax paid £0.00
Medical Insurance Payments £151 Tax paid £0.00

Totals £19122 Tax paid £1428.40

Your income after taking away deductions £19122

Personal Allowance £10500

Less Total Tax Allowances £10500

Income Tax is chargeable on this amount £8622

Tax on £8622 is:
Basic rate at 20% on £8622 = Tax paid £1724.40

B Tax chargeable = £1724.40

Plus other adjustments £15.66

C Plus Total adjustments £15.66

D Tax payable (B plus C) £1740.06

Tax underpaid (D minus A) £311.66

Tax underpaid £311.66

Kind regards - rollon65.

As you can see your total income includes pension income and work income (PAYE) as I said. Calculations seem correct as long as you agree on figures for your total income.

The extra £15.66 doesn't appear to be anything to do with health care as it's already mentioned at the top. Plus it's being added directly to your tax bill as opposed to it being taxable income. It could be tax owed from the previous tax year.

jem16

rollon65 wrote: »

Hello again All,
Changing the subject back to my wife's tax issues.
She rang HMRC today and specifically asked to speak to a supervisor on the grounds of the multiple shades of opinion she had been met with until now.
Her P800 has been declared a "basket case" and will be recalculated.
This won't mean that she will not have to pay something back, but there is the hint that the basic income tax calculation is flawed, so fingers crossed on that one.

Don't get your hopes up on that one I'm afraid as my calculations from your figures produced a very similar underpayment.

Did you ask any questions about appealing under ESC 19A with reference to time limits?

rollon65

Hello again Jem16,

Nothing ventured - nothing gained, as they say!
My wife didn't exactly labour the ESC 19A ruling because as you say it's a very tenuous possibility, but she did at least feel that she got a fair hearing.
The lady at HMRC referred to a number of income related documents which my wife had and between them they determined that whilst the mathematics were pretty much in order, it transpired that there might have been an over-statement of the amount of State Pension Income used in the calculation.
We shall see (and hopefully learn from the mistakes that you have pointed out for us, whatever the outcome).
I have checked the pension amounts for myself against the annual statements from my providers and don't see any discrepancy - so I guess I do owe the back tax.
I do feel just a little bitter that as an upright an honest citizen, with no intention of evading my dues, that I have allowed myself to be caught in this situation though.
Also, what other kind of service provider would get away with just adding an additional amount (£15.66) to your bill without quite clearly indicating what it was for? I imagine you might ask why I didn't ring them and ask.
My private pensions are all a fixed commodity and will never vary in my lifetime, so it's only the State Pension that might/will change and I think that I expected on those grounds that I would not need to add anything to what HMRC had been informed of at the onset in order to have the correct amount of income tax applied.
Can you forsee any likely future situation beyond my ultimate demise where I might have to ensure that HMRC are up to speed with my affairs?

Kind regards - rollon65.

jem16

rollon65 wrote: »

Also, what other kind of service provider would get away with just adding an additional amount (£15.66) to your bill without quite clearly indicating what it was for?

I assume it doesn't give more information on it somewhere else on the P800?

I imagine you might ask why I didn't ring them and ask.

It had crossed my mind, yes.

Can you forsee any likely future situation beyond my ultimate demise where I might have to ensure that HMRC are up to speed with my affairs?

Really just keep an eye on those P2 Coding notices for your pensions, Make sure the first one gives a true account for the deduction of the state pension and make sure the 2nd one uses BR.

At the end of each tax year I would also advise you to add up your state pension plus other pensions and make sure you have neither overpaid nor underpaid tax.

Anyway good luck with it all. You're now more aware that you need to keep your eye on tax affairs.

Hopefully your wife will hit it lucky too.