Complex Tax question

PixiePie

Have been reading on some other forums about the Tax Code thing after your are BR.

Question 1)
Does your tax code automatically change for the year, or only if you are given an IPA/IPO? (seen conflicting advice on that one)
Question 2)
If you do not pay tax, because you do not earn enough, will your tax code change (even if you are working, but do not earn enough to pay tax/NI on PAYE)?
Question 3)
If you do not pay tax and your tax code does change, basically it is changing for no reason, but might be detrimental to your employer as they have to sort it out, and therefore might not have to be changed? (I'm not trying to be argumentative and problematic on this one, but I have a HUGE personal reason for my tax code not changing until I change jobs.)

I was thinking this is surely all a bit stupid anyway - all it causes surely is a load more paperwork for people as doesn't the Gov get your tax anyway, just through the OR instead of just off your pay, or do your creditors get your tax for the year?

I realise none of this is important in the grand scheme, just finding it perversely interesting as well as a little scarey still lol.

Posthinking

Firstly it depends at what point in the tax year you go BR. Mine was October and it didn't change at all. IPA/IPO is irrelevant. It takes a while to set up.
If you dont pay tax already then nothing will change BUT the NT code will be applied in case hours increase.
Lets say you were paying tax. The NT code would mean you wouldn't, BUT the tax you should have been paying would need to be handed over to the OR or trustee by you. It goes towards paying creds back but it only lasts for the current tax year. Come 6th April next year everything reverts.
NT codes are applied for other reasons too. Hope this helps

betterlatethannever

your right you have some strange perversions:p
I have no idea on the answer to your question (in fact i'm not even sure i understand it ) lol but at least replying to this message keeps the really stupid message from the top of the board.:mad:
I hope you get the answers you require, so you can sleep well.:o

PixiePie

LOL, thank you guys - will cross fingers , squeeze my eyes tight and hope beyond hope they don't bother with me then (won't bore you with why I don't want to tax code changed whilst I'm not paying any tax).

Another tax question (oh I'm in question mode again lol) - I read on another website (from a money person, not a general public member) that if your tax code gets changed and you get the tax the have to give it to the OR, this is a tax only IPA/IPO and it means you will get the IPA for 3 years and if your income changes it will too. Which doesn't make sense to me, because from what I've read about the tax code change (ie, a bankrupt is not liable to pay income tax for the rest of the tax year, but the OR takes it anyway) it effects *everyone* that pays income tax, and therefore surely that would mean that most people who are going BR would get an IPA/IPO whatever their income at the point of BR/during term of BR/Before discharge for BR.

My head is about to explode - can they not just make it simple?? :mad: (or, can I stop complicating things might be a better question, and just not worry :rotfl:)

Posthinking

Can't you ask easy ones??? I don't think an NT code has anything to do with an IPA, that is assessed seperately based on income and expenditure. NT codes definitely only last for the tax year in which you petition for BR, that much I do know for certain

PixiePie

LOL - nope, sorry, one of the problems with being borderline Autistic I'm a bit an*l when it comes to such matters (another reason I haven't gone BR yet I guess, I have to understand everything completely. Although you could argue that I'm just lazy and hate change if you didn't like me, so not a great excuse lol).

Hmm, yes I am slightly concerned at some of the advise on the other site - the 'expert' seemed to urge people a bit too much for my liking to go BR and then not get a job/loose their job so that they didn't get an IPA. Not very honest, well, not honest I guess, more moral? I know I'm a fine one to talk, going BR and everything (oh, living in sin, um, what else...oh I fart sometimes (such a lady )...) but just didn't like the advice being given, seemed a bit underhand to me. I know we don't have to make it harder for ourselves, and I guess that's the sticking point for me - I really feel like I deserve a good flogging, so the thought of giving up a job brings to mind Benefit cheaters who I really have a hard time accepting (but then, the benefit system in this country is a WHOLE other rant, and gets me onto the stupid costs of the houseing market, and how much a jacket potato costs....I'm such an old woman )

Kj123_2

Hello Everyone, I've been reading with 'interest' a lot of the goings on. I have however been looking for and finding some advice with respect to debt and BR issues. So thanks to all who contribute, this is just my first post.

Following on along the lines of this topic.

When an NT tax code is applied, who is responsible for paying 'what would have been income tax' to the OR?

gettingitsorted

This may help its taken from the insolvency service

Applying a 'Nil tax' code

If you pay tax under PAYE, HM Revenue and Customs (HMRC) will usually apply a 'nil tax' code to you for the rest of the tax year in which you were declared bankrupt. This means that soon after your bankruptcy, your employer will be told NOT to take any more income tax from your wages for the rest of the tax year. HMRC applies nil tax codes for various reasons, and the new tax code will not tell your employer you are bankrupt. The nil tax code does not mean no tax is due. It just enables HMRC to claim the whole of your unpaid tax for the year of your bankruptcy.

There will be extra money in your pay because of the nil tax code. This money will form the basis of an IPA or IPO, even if you have no other real disposable income. A nil tax (or NT) IPA or IPO may be the only amount you have to pay, and the agreement or order will stop when your tax code changes. If you have other real disposable income, the IPA or IPO will reduce when your tax code changes.

Richard_S

PixiePie wrote: »

LOL, thank you guys - will cross fingers , squeeze my eyes tight and hope beyond hope they don't bother with me then (won't bore you with why I don't want to tax code changed whilst I'm not paying any tax).

Another tax question (oh I'm in question mode again lol) - I read on another website (from a money person, not a general public member) that if your tax code gets changed and you get the tax the have to give it to the OR, this is a tax only IPA/IPO and it means you will get the IPA for 3 years and if your income changes it will too. Which doesn't make sense to me, because from what I've read about the tax code change (ie, a bankrupt is not liable to pay income tax for the rest of the tax year, but the OR takes it anyway) it effects *everyone* that pays income tax, and therefore surely that would mean that most people who are going BR would get an IPA/IPO whatever their income at the point of BR/during term of BR/Before discharge for BR.

My head is about to explode - can they not just make it simple?? :mad: (or, can I stop complicating things might be a better question, and just not worry :rotfl:)

Hi Pixie,

The effect of an NT Code on IPA/IPO is quite straightforward. If you're not paying tax you've got a bit more to pay into an IPA/O; when your NT code reverts to normal you've got less money in your pay packet so your IPA/O drops accordingly.

As for whether they give you an NT Code if you're not paying tax, I don't know; you could try phoning the tax office, or emailing the Insolvency Service.

If there's some reason that you'd rather not post the reasons for not wanting an NT Code then send me a PM; I'm not a tax expert but basic PAYE and Corporation Tax is within my limited knowledge. ..

Richard

user55

Since we are on the subject, the thing that concerns me is the variation in my monthly pay is wide - there can be £700 difference from one month to the next. And the OR has asked me for my last 3 months wage slips. Two are "average" and one is above average. But I'm fully expecting the next 3 to be below average. I don't want to end up with an IPA - based on tax or otherwise - that reflects the upper end of my wages - I won't be able to survive the leaner months if that happens.

I know I can tell him all this. Doesn't stop me worrying about it though.

owetoomuch

This is just my experience

When I went BR I had to inform the OR how much tax I pay in a 'basic' month, I think this is on your BR forms. I signed a form stating that when the NT code was enforced I would pay the trustees of my BR the monies. Since going BR I have had to post off a copy of each months payslip to the trustee while waiting for the NT code to be applied (2 so far as timing was just before after a payday, I supplied the OR with 2 payslips at time of BR). I think the OR only goes on what you would pay on a flat month if your salary is variable as you cannot predict when and how much overtime you would receive. When you have your OR interview you need to explain your situation to them and they will work out how much you pay accordingly.