Adjustment to tax rate band

gavcradd

Hi, I've today been sent notice of my tax code for next year, and there is a new line on there that says "adjustment to tax rate band" with a figure of roughly £2,000 on - my tax free allowance has been reduced by this amount. The note alongside this says :

We will check if there is anything that would reduce your tax-free amount. Sometimes when you have more than one job or pension you end up paying too little tax if some of your income becomes taxable at higher tax rates. We have included this adjustment so you pay the right amount of tax.

Now, this rings a bell as I am a teacher and I have a second job as a reasonably senior exam marker for an exam board - I mark papers in the summer, I write a few things for them, etc. However, I certainly haven't gone over the 40% threshold so this doesn't make sense.

The tax on my marking work is always just a flat 20% (with tax code BR) and is taken via PAYE, which is easy as I sometimes go months without earning any and then do a glut over a month.

To perhaps complicate it slightly, I do pay into my workplace pension AND have childcare vouchers, both of which come out before tax and so are not included in my taxable income

The figures for this year will be (from my payslips, assuming the next few months are the same as always):
Annual taxable income from main job : £37,599
Annual income from marking job : £2,756 (for this year, changes each year depending what I do for them but this is the highest it's ever been)
Total annual income : £40,355

Current tax code : 1013L (so £10,130 tax free?)
Current rate that 40% kicks in : £31,865
Amount I can earn before paying 40% tax : £41,995

Amount that my new tax code has been reduced by : £2,047
New tax code for 2015/16 : 868L

So...any idea why they've made this adjustment? I don't have any other incomes. I do pay a tiny second pension of £50 a month, but the tax relief from this goes into the pension pot.

I'd appreciate any guidance before I ring them and make a fool of myself! Thanks :money:

noh

Which job is that tax code applied to?
I received three tax coding notices today, in separate envelopes, one for a pension the other two for paye employments.
My full tax code is split among the three.

You probably have another coding notice to come for the marking job which won't be BR.

jem16

gavcradd wrote: »

So...any idea why they've made this adjustment? I don't have any other incomes. I do pay a tiny second pension of £50 a month, but the tax relief from this goes into the pension pot.

You will probably find that HMRC has managed to estimate your income from both jobs as higher than it actually is. They often did that with me.

I'd appreciate any guidance before I ring them and make a fool of myself! Thanks :money:

No you need to phone them and find out what they are basing the reduction on and give them your accurate figures.

gavcradd

noh wrote: »

Which job is that tax code applied to?
I received three tax coding notices today, in separate envelopes, one for a pension the other two for paye employments.
My full tax code is split among the three.

You probably have another coding notice to come for the marking job which won't be BR.

The tax code is for the main teaching job. I've just noticed as well that, although I received it today, its dated January 2015. I wonder if I did a bit more marking that month and they've estimated it based on me doing that every month. Hmm.

zygurat789

noh wrote: »

Which job is that tax code applied to?
I received three tax coding notices today, in separate envelopes, one for a pension the other two for paye employments.
My full tax code is split among the three.

You probably have another coding notice to come for the marking job which won't be BR.

If this is the case you have the right to tell HMRC which jobs to allocate how much of your allowances you choose.
My daughter has a part time job which is seasonal from Sept - April so she has all her allowances allocated to her main job so that she receuives her allowances earlier than how HMRC would have it by splitting them. If your income is received July to Sep then you would only receive part of your allowances through PAYE and would have to reclaim after the end of the tax year.
Far simpler to have all your allowances against your main job.