IPA and nil tax code

Bella_Smythe

so at the OR phone interview on tuesday she said on my budget i wouldnt get an IPA, but that I wouldnt pay any tax and would pay my unpaid tax towards the creditors.
and yesterday i got a letter basically asking me to sign an agreement to that effect, an estimated £68 a month that I would pay for the rest of this tax year.
The only thing bothering me is they described it as and IPA. so by agreeing am i committed to the 3 year possible up and down IPA thing depending on my income?
Thanks, boffins,
Bella

philnicandevan

Bit of a read here

https://forums.moneysavingexpert.com/discussion/1064237

the examiner's probably not explained very well...an NT(nil tax) IPA last for the tax year where as an IPA is any excess after living expenses over £20 per month is then taken for 3yrs

debtinfo

Technically an IPA, is an IPA, is an IPA. there is only one type, it collects surplus income. it doesn't collect the tax just the surplus created by not having to pay the tax. An IPA is for a maximum of 3 years but can actually be for any amount of time up to 3 years. What matters are the terms agreed to in the document, so if it says it is for a shorter time then once signed that's hat has to be stuck to.

georgiasmum

sorry to jump in here but I have just signed the document for the 'tax' IPA ( i know its not strictly tax) but would like to know who I pay it to, how I pay it and when it starts? I don't seem to be on NT code yet either. Do i pay the ipa and regular tax?

TheGardener

georgiasmum wrote: »

sorry to jump in here but I have just signed the document for the 'tax' IPA ( i know its not strictly tax) but would like to know who I pay it to, how I pay it and when it starts? I don't seem to be on NT code yet either. Do i pay the ipa and regular tax?

An agent of the OR will contact you (usually Clark Willmott) They will ask to see your most recent payslip and, IF the NT code has been applied, they will arrange to collect whatever tax IPA your OR has decided. You just sit back and wait for the agent to get in touch, then follow their instructions. If the NT code is applied (and the extra money is in your pay packet) before the agent gets round to contacting you - you must put that money aside and not spend it.

georgiasmum

what happens to the tax paid in the interim?

TheGardener

georgiasmum wrote: »

what happens to the tax paid in the interim?

I believe the OR will collect all tax you have paid since the start of this financial year up to the point you start paying the agent from HMRC.