Could do with some advice please - becoming a taxpayer again

jem16

Bogof_Babe wrote: »

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.

It's unlikely to be but perhaps if you give the name, we can be sure.

The type of bond that was being referred to is an Investment Bond where 5% annual withdrawals are "tax-free". They are not really tax-free as the tax is pre-paid within the Bond and cannot be claimed back. These kind of bonds were really only for those needing to avoid higher rate tax.

Bogof_Babe

jem16 wrote: »

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.

£1350 is 12 weeks pension. I calculated 11 weeks remaining but I probably did it wrong.

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?

No, no mention of 'cumulatively' or 'non-cumulatively'. It's a fairly straightforward letter - even I can understand it!

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

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.

I feel much happier now I know HMRC are fully aware of everything. Once I've changed my interest to net I think I can stop worrying about it .

Bogof_Babe

jem16 wrote: »

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

Got a few household things I must attend to, but will come back in an hour or so and post the figures...

jem16

Bogof_Babe wrote: »

No, no mention of 'cumulatively' or 'non-cumulatively'.

It will not mention those actual words and is actually easy to miss.

It will say;

we have asked your pension provider to use this code in a special way.

Bogof_Babe

Letter:

Total arrears owed = £1034.53
Paid to me = £720
Withheld = £314.53 (slightly over 30%, which I make £310.36)

1st pay slip did itemise Arrears + new payment - payment on account - £165.20 tax, so summarises activity to date.

2nd pay slip = gross pension no deductions.

Bogof_Babe

jem16 wrote: »

It will not mention those actual words and is actually easy to miss.

It will say;

we have asked your pension provider to use this code in a special way

Nope, nothing like that. It just says "[Pension provider] will use this tax code to work out the right amount of tax to take off each time they pay you. We will tell [Pension provider] your tax code but we do not tell them how we worked it out."

It also says that I should not have NI deducted since reaching SPA and to check to make sure they are not doing so.

(Prefer not to identify pension provider on a public forum but will PM it to you if you want to know.)

jem16

Bogof_Babe wrote: »

1st pay slip did itemise Arrears + new payment - payment on account - £165.20 tax, so summarises activity to date.

As I said, a very odd way of working it as presumably no tax was ever paid to HMRC until they operated a tax code for you. Why they have gone for 30% as opposed to the more normal 20% using a BR tax code, who knows?

Bogof_Babe wrote: »

Nope, nothing like that. It just says "[Pension provider] will use this tax code to work out the right amount of tax to take off each time they pay you. We will tell [Pension provider] your tax code but we do not tell them how we worked it out."

That's good. It's always mentioned in a Special Note and is usually done when your tax code has lowered as your has done. However in this case it's better to be cumulative as you will get that overpaid tax back in your next pension payment. However in doing that it may leave you with an underpayment because of your savings income.

It also says that I should not have NI deducted since reaching SPA and to check to make sure they are not doing so.

A strange thing to say considering pensions never have NI taken off them no matter what age you are.

(Prefer not to identify pension provider on a public forum but will PM it to you if you want to know.)

No need, thanks.