Tax office saying underpaid tax yet again. Correct?

edited 30 November -1 at 1:00AM in Cutting Tax
33 replies 5.6K views
JustAnotherSaverJustAnotherSaver Forumite
5.9K Posts
Eighth Anniversary 1,000 Posts Name Dropper I've been Money Tipped!
✭✭✭✭
edited 30 November -1 at 1:00AM in Cutting Tax
My mum's been given yet another letter from the tax office saying she's underpaid tax yet again.
She got the same letter last year saying she'd underpaid a few £100 so she's having to repay in installments as she can't afford it in 1 whack.
Now she's got another letter for the following tax year (last one) for even more money & she asked me to come on here to check everything is ok...

MumTax001_zps4424b139.jpg

As she doesn't work due to disability her income is as follows for 2012/13...

DWP IB - 25 payments totalling £5248.04
My dads pension - 12 payments totalling £3710.83
DWP DLA - this is a tricky one as her online statement will only go back 15 months to Sept 2012. From (& inc) Sept 12 to March 13 each of those months had 1 payment of £298.40 except Oct which had 2. Assuming Oct was the only month that had 2 payments, this would give a total of: £3879.20


Based on the image, the £3710 must be my dads pension.
Their quoted incapacity benefit is higher than what is showing in my mums account.
No idea what the £2.7k is.

IF everything is A-ok then she's asked if there's any way they can change her tax code so this money comes out automatically in future instead of her being presented with a big bill every 12 months.

«134

Replies

  • jem16jem16 Forumite
    19.1K Posts
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    ✭✭✭✭✭
    IF everything is A-ok then she's asked if there's any way they can change her tax code so this money comes out automatically in future instead of her being presented with a big bill every 12 months.

    What is the tax code used on her pension from your Dad?

    It should be her personal allowance minus the IB and the DLA ( if taxable ). That way the tax will be collected over the year.

    You need to find out what the £2.7k is for if you don't know.
  • jimmojimmo Forumite
    2.2K Posts
    Part of the Furniture 1,000 Posts Name Dropper
    ✭✭✭✭
    There are 2 things to check here.

    1) Is the calculation correct?

    2) Why are underpayments continuing to arise without HMRC seeming to do anything about it?

    1) Here are lists showing which benefits are non taxable and which are taxable.

    http://www.hmrc.gov.uk/manuals/eimanual/EIM76100.htm

    http://www.hmrc.gov.uk/manuals/eimanual/eim76101.htm


    DLA is non taxable and should be ignored.

    State Benefits commonly refers to Widows Pension but it could also be any of the benefits which are taxable so unless your mum receives Widows Pension, take another look at the list of taxable benefits.

    When my wife received Incapacity benefit she was paid every 2 weeks so in a full Income Tax year she would receive 26, sometimes 27, payments. Are you sure your mum only received 25?

    The remainder of the calculation is relatively straightforward and correct but I think it would be wise for you to be able to reconcile the calculation with your mum‘s income before moving onto 2).

  • JustAnotherSaverJustAnotherSaver Forumite
    5.9K Posts
    Eighth Anniversary 1,000 Posts Name Dropper I've been Money Tipped!
    ✭✭✭✭
    jem - sorry i don't know the answer to that one. Any idea how i/she could find out? Calling the provider maybe? Or the tax office?

    jimmo - positive there was 25 payments. Every month had 2 payments in it of £210.10 with the exception of May 2012 which had 3 payments and April 2012 which only had the one & that amount was £205.64 (the only payment that was different from £210.10). I went through her online account with her yesterday & we looked at EVERY income entry together.

    These are literally the only sources of income she has & that is that. In 2011/12 she had other entries as my dad died in 2011 & she received lump sums & other payments, but for 2012/13 this is all she's had.

    Would the tax office be able to tell her what the £2.7k is? As we really can't work it out.

  • susosuso Forumite
    548 Posts
    Has she kept the p800 from last year, if so can you post the details of that up.

    I suspect, the 2.7K was something from that year that was expected to happen again this year (bereavement allowance perhaps ?)

    does she have a notice of coding for this year as well, chances are that the 2.7k will be in this as well .
    He's not an accountant - he's a charlatan
  • jem16jem16 Forumite
    19.1K Posts
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    ✭✭✭✭✭
    jem - sorry i don't know the answer to that one. Any idea how i/she could find out? Calling the provider maybe? Or the tax office?

    If she does not get payslips with the pension, then she should at least get a P60. What does that say?
    jimmo - positive there was 25 payments. Every month had 2 payments in it of £210.10 with the exception of May 2012 which had 3 payments and April 2012 which only had the one & that amount was £205.64 (the only payment that was different from £210.10). I went through her online account with her yesterday & we looked at EVERY income entry together.

    You may have missed one. What about April 2013 - there may have been one before April 5th.
    These are literally the only sources of income she has & that is that. In 2011/12 she had other entries as my dad died in 2011 & she received lump sums & other payments, but for 2012/13 this is all she's had.

    Would the tax office be able to tell her what the £2.7k is? As we really can't work it out.

    Your mum should phone HMRC today and ask about the £2.7k and find out what her tax code was against the pension. With a personal allowance of £8105 and a deduction of £5458 for IB it should have been set at 264L but it clearly hasn't as she hasn't paid any tax on her pension.

    I'd also ask about her tax code for this year so that these underpayments don't keep cropping up and as jimmo says find out why the tax code wasn't set correctly after the underpayment for the previous year.
  • agrinnallagrinnall
    23.3K Posts
    ✭✭✭✭✭

    jimmo - positive there was 25 payments. Every month had 2 payments in it of £210.10 with the exception of May 2012 which had 3 payments and April 2012 which only had the one & that amount was £205.64 (the only payment that was different from £210.10). I went through her online account with her yesterday & we looked at EVERY income entry together.

    But that doesn't add up to 25 payments:

    10 x 2 = 20
    1 x 3 = 3
    1 x 1 = 1

    Total = 24

    Amount paid = (23 x 210.10) + £205.64 = £4832.30 + £205.64 = £5037.94.
  • zygurat789zygurat789 Forumite
    4.3K Posts
    Part of the Furniture Combo Breaker
    ✭✭✭✭
    agrinnall wrote: »
    But that doesn't add up to 25 payments:

    10 x 2 = 20
    1 x 3 = 3
    1 x 1 = 1

    Total = 24

    Amount paid = (23 x 210.10) + £205.64 = £4832.30 + £205.64 = £5037.94.

    Payments being made every two weeks. 26 in year.
    The only thing that is constant is change.
  • xylophonexylophone Forumite
    38.2K Posts
    Part of the Furniture 10,000 Posts Name Dropper
    ✭✭✭✭✭
    Is the £2754 Bereavement Allowance paid for up to a year after her husband's death?
  • edited 30 November 2013 at 7:48PM
    jem16jem16 Forumite
    19.1K Posts
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    ✭✭✭✭✭
    edited 30 November 2013 at 7:48PM
    xylophone wrote: »
    Is the £2754 Bereavement Allowance paid for up to a year after her husband's death?

    I would say this is more than likely. The OP's Mum was 49 when she was widowed and would have been eligible for Bereavement Allowance as well as the Bereavement Payment lump sum.

    Last year's underpayment notice contained £2718 as State Pension/Benefits. Pretty similar to this year so it's either Bereavement Allowance or another State Benefit the Op's mother is entitled to.
  • agrinnallagrinnall
    23.3K Posts
    ✭✭✭✭✭
    zygurat789 wrote: »
    Payments being made every two weeks. 26 in year.

    I know, but that's not what the OP said had been paid, read the quote in my post. I suspect that they have read the statement incorrectly and there are in fact more payments, but neither you nor me can see that and at this time we have to go on what the OP said, and that comes to 24.
This discussion has been closed.
Latest MSE News and Guides

Ultrafast broadband upgrades

Being made available to more English counties

MSE News

30+ ways to stop scams

Incl tips to spot 'em & what to do if you're scammed

MSE Guides

£37 of No7 beauty products for £12

Available online and in stores

MSE Deals