Could do with some advice please - becoming a taxpayer again

jennifernil

jimmo wrote: »

Yes but she has already spoken to HMRC. Whilst she hasn’t actually said so I assume that HMRC will now be issuing a cumulative coding for 2013/14 with nil previous pay and tax and a deduction for State Pension.
If so, all PAYE deductions made so far will be refunded via PAYE before the year end.

Ah, right, I didn't pick up on that. You are, of course, correct.

She will need to check that the pension provider does receive and use a new code before the end of the TY.

jennifernil

Bogof_Babe wrote: »

I opted for weekly payment of my SRP so have calculated it up to the final payment of the year on 3rd April.

I laboriously added up every penny of interest I've had this year, and what I expect to get before 5th April. I also calculated my received and anticipated occ pension payments and SRP.

The result was that my total income for 13-14 will be £11,910 - this assumes I stay with gross interest and no further tax deducted from occ pension. Thus I'd owe tax on £2470. (Not sure where the £165 tax already taken from my occ pension fits in.)

That is a bit different from your first figure!

jem16

Bogof_Babe wrote: »

The result was that my total income for 13-14 will be £11,910 - this assumes I stay with gross interest and no further tax deducted from occ pension. Thus I'd owe tax on £2470. (Not sure where the £165 tax already taken from my occ pension fits in.)

If I'm understanding correctly, the tax would be due at 10% (still getting my head around this), so £247.

That's correct, yes.

Your £165 tax payment was taken at a time when they were using the BR or 0T tax code for the first payment or two.

Can you confirm that when you were taxed £165 for your back payment that it was paid separately from the payments where the 944L Mth1 code was used? I did ask you that earlier but you possibly missed it.

If I immediately change all my bond interest to net, this reduces my bond income by £258, so just about break even overall.

How quickly can banks and building societies make the change do you think? Probably won't be able to get hold of anyone until Monday now. Most of them pay into my current account on 1st of the month, but the £277 one pays in on 17th, so there's a full month until the next one is due.

It should happen as soon as you notify them. I wouldn't worry about it though.

If my occ pension provider receives notification of my tax code quickly, and starts making deductions, I'll then be out of pocket overall. So still deciding what to do.

Whatever way it happens this tax year, it's probably not going to work out absolutely correctly. There's likely to be only 2 more payments in this tax year depending on what date your occupational pension is paid.

Personally I'd let the bank know so they can pay net interest from now on and leave the pension using the emergency tax code just now. It will work out reasonably well and should mean you don't overpay tax this tax year.

What I would be working on is making sure your tax code for next year is sorted out and ready to use from April. Any slight underpayment from this tax year can either be paid or coded out, probably from 2015.

antonic

Just to add , that each year every financial institution , where an account is registered to receive gross interest using a form R85, reports this information to HMRC.

HMRC then data match the information with the information they hold to identify any incorrectly registered accounts.

When these accounts are found HMRC will write to the account holder and financial institution to advise that the R85 must be cancelled and all future interest must be paid net of tax - I am not sure if there if there is a de minimus limit below which HMRC will NOT collect the unpaid tax.

So even if you "forget" to deregister HMRC will do it for you !.

Hope this helps.

zygurat789

The original request was for advice.
On an ongoing bases it must be to thoroughly understand and check the coding notice(s) each year as soon as they arrive and deal with any issues immediately.
As for the current year this cannot be settled until after 5 April 2014 when a P800 will be issued, it would be a good idea to drop HMRC a line telling them all income received and tax deducted therefrom.
One other point, make sure that all the income you are recieving is taxable. There are bonds which allow you to receive money which is not taxable because it is a return of capital rather than income. To the untrained eye these take a bit of spotting but the payers will know and will not deduct tax but you wouldn't want to include these in any list you sent to HMRC.

Bogof_Babe

Update! Received letter today from HMRC (dated 12th Jan, so they already had it in hand before I even phoned them) giving me a tax code of 809L for 2013-14, and I deduce from the wording that they have also informed my occ pension provider of this. Presumably they will adjust future payments as necessary, and take into account the £165 already deducted. I need to assimilate this information and try to work out what it means in terms of what I'll receive, and will be back asking for help if need be!

To answer individual posts since yesterday:

jennifernil wrote: »

That is a bit different from your first figure!

In my original post I was talking about 2014-15. Apologies if I confused the issue. I got on to the current year later in the thread.

jem16 wrote: »

That's correct, yes.

Your £165 tax payment was taken at a time when they were using the BR or 0T tax code for the first payment or two.

Can you confirm that when you were taxed £165 for your back payment that it was paid separately from the payments where the 944L Mth1 code was used? I did ask you that earlier but you possibly missed it.

This ^ needs a separate post as it's longwinded so will follow...

It should happen as soon as you notify them. I wouldn't worry about it though.

Whatever way it happens this tax year, it's probably not going to work out absolutely correctly. There's likely to be only 2 more payments in this tax year depending on what date your occupational pension is paid.

Occupational pension is paid every four weeks, so 13 payments a year. I didn't choose that, it seems to be how the scheme is set up.

Personally I'd let the bank know so they can pay net interest from now on and leave the pension using the emergency tax code just now. It will work out reasonably well and should mean you don't overpay tax this tax year.

I agree. Saves any unnecessary complications. If I phone round when I'm back on 24th Jan I'll hopefully catch them in time. Presuming I don't have to inform them in writing?

What I would be working on is making sure your tax code for next year is sorted out and ready to use from April. Any slight underpayment from this tax year can either be paid or coded out, probably from 2015.

The letter I've received today only relates to 2013-14 so I'm presuming they will send me a new one for 14-15.

(Will go back upthread to click all the Thanks when I've finished answering everything!)

jem16

Bogof_Babe wrote: »

Update! Received letter today from HMRC (dated 12th Jan, so they already had it in hand before I even phoned them) giving me a tax code of 809L for 2013-14, and I deduce from the wording that they have also informed my occ pension provider of this.

Yes it's automatically sent to your pension provider as well, although check on this with your next payment. Your tax code has a deduction of £1350 place against it now which is presumably for your state pension.

Presumably they will adjust future payments as necessary, and take into account the £165 already deducted.

That depends on whether or not HMRC have asked them to use it cumulatively or non-cumulatively.

If it's non-cumulative it will say in the notes that we have asked your pension provider to use this code in a special way.

Any sign of those words?

The letter I've received today only relates to 2013-14 so I'm presuming they will send me a new one for 14-15.

They should do. This will have a higher deduction for the state pension and if your earlier figures were correct, should be around 401L.

I agree. Saves any unnecessary complications. If I phone round when I'm back on 24th Jan I'll hopefully catch them in time. Presuming I don't have to inform them in writing?

HMRC have now amended the tax code and depending on how it's to be used, you may end up with an underpayment. However better that then trying to get it back off them.

Bogof_Babe

My initial occ pension payment was advised by letter, not a proper pay slip, so no tax coding details shown. They stated that they had calculated the back-pay owed, and were paying me 70% of it, withholding 30% "to cover any tax that may be due".

Both subsequent pay slips have shown code "944L MTH 1". The first of these was inflated to include the balance of the 30% previously deducted less the £165 that they calculated was due. The second pay slip deducted no tax at all. (I'll post actual figures if anyone wants them.) That's where I'm up to now.

Bogof_Babe

antonic wrote: »

Just to add , that each year every financial institution , where an account is registered to receive gross interest using a form R85, reports this information to HMRC.

HMRC then data match the information with the information they hold to identify any incorrectly registered accounts.

When these accounts are found HMRC will write to the account holder and financial institution to advise that the R85 must be cancelled and all future interest must be paid net of tax - I am not sure if there if there is a de minimus limit below which HMRC will NOT collect the unpaid tax.

So even if you "forget" to deregister HMRC will do it for you !.

Hope this helps.

That does indeed help! Takes the pressure off me to ensure it is done, although I will notify them anyway.

zygurat789 wrote: »

The original request was for advice.
On an ongoing bases it must be to thoroughly understand and check the coding notice(s) each year as soon as they arrive and deal with any issues immediately.
As for the current year this cannot be settled until after 5 April 2014 when a P800 will be issued, it would be a good idea to drop HMRC a line telling them all income received and tax deducted therefrom.
One other point, make sure that all the income you are recieving is taxable. There are bonds which allow you to receive money which is not taxable because it is a return of capital rather than income. To the untrained eye these take a bit of spotting but the payers will know and will not deduct tax but you wouldn't want to include these in any list you sent to HMRC.

All the bonds I took out stated in their literature interest rates both gross and net, so I'm assuming I don't have any of the sort you refer to. Incidentally I do use my Cash ISA allowance every year, but obviously that isn't relevant to this thread.

jem16

Bogof_Babe wrote: »

My initial occ pension payment was advised by letter, not a proper pay slip, so no tax coding details shown. They stated that they had calculated the back-pay owed, and were paying me 70% of it, withholding 30% "to cover any tax that may be due".

That's a new one on me. Didn't think they could do that.

Both subsequent pay slips have shown code "944L MTH 1". The first of these was inflated to include the balance of the 30% previously deducted less the £165 that they calculated was due.

What they should have done was add the gross amount of backdated pension to the amount due for that 4 weekly period, then taken tax off (or not as would have been more likely) according to the 944L tax code.

The second pay slip deducted no tax at all.

I would expect that from your figures.

(I'll post actual figures if anyone wants them.) That's where I'm up to now.

I'd like to see the actual figures from the first payslip especially.