New Tax Code - Lower Personal Allowance?

Samsonite1

Hi,

I thought I had missed something when I got a letter from HMRC saying that I now have a personal allowance of £7786.

On checking the details, you only lose tax allowance if you earn over £100k - I do not. Apparently I would be earning £105,628 to get this tax code. I think I would know about it if I did!

What else counts towards this other than salary and bonuses? My company pays into a pension scheme - does this get taken into account?

I feel I need to improve my knowledge about how this figure might be calculated.

Any info welcome and sorry for what is probably a stupid question(s)!

Darksparkle

Taxable benefits can reduce your personal allowance as a way to recover the tax due eg company car, medical insurance etc.

Do you get a P11d?

Or a debt from a previous year.

Or some other form of untaxed interest eg interest.

Doesn't the letter explain why you have a reduction?

CLAPTON

Samsonite1 wrote: »

Hi,

I thought I had missed something when I got a letter from HMRC saying that I now have a personal allowance of £7786.

On checking the details, you only lose tax allowance if you earn over £100k - I do not. Apparently I would be earning £105,628 to get this tax code. I think I would know about it if I did!

What else counts towards this other than salary and bonuses? My company pays into a pension scheme - does this get taken into account?

I feel I need to improve my knowledge about how this figure might be calculated.

Any info welcome and sorry for what is probably a stupid question(s)!

the main reasons for having a lower tax code other than earning more than 100,000 are
-any benefits in kind
-any tax owed from previous years
-if you have more than one job

the notice should show how they calculate the new figure

Samsonite1

All they say is that I owe £146 from the previous year (underpayment). This means they take £365 pounds from my allowance - it does not say how they arrive at that figure, but never mind about that for now.

Then they just say that my personal allowance due to taxable income is £8151. They deduct the £365 above to get £7786. There are no other details.

I have no other income and cannot get a figure above £100k. I received £3,300 from the student loan company because I had paid off my loan long before the last annual statement, but that is just about the only other thing I can think of and it still does not add up to that much.

Darksparkle

Samsonite1 wrote: »

All they say is that I owe £146 from the previous year (underpayment). This means they take £365 pounds from my allowance - it does not say how they arrive at that figure, but never mind about that for now.

Then they just say that my personal allowance due to taxable income is £8151. They deduct the £365 above to get £7786. There are no other details.

I have no other income and cannot get a figure above £100k. I received £3,300 from the student loan company because I had paid off my loan long before the last annual statement, but that is just about the only other thing I can think of and it still does not add up to that much.

That suggests you are a 40% taxpayer, £365 x 40% = £146.

What about child benefit? Do you or your partner get that and you have an income over £50,000?

We can only really guess here without knowing more.

Maybe just give them a call and ask?

CLAPTON

to raise 146 per annum in tax requires a decrease in tax allowance of
730 if you area 20% tax payer (i.e. 20% of 730 = 146)
or 365 is you are a 40% tax payer (i.e. 40% of 365 = 146)

but if there is no explanation of why your base amount is 8151 then you will need to phone HMRC
do you have any untaxed income?

agrinnall

Check your (no doubt meticulously filed) records for the P2 Coding Notice that explains why your previous personal allowance was £8151. Have you actually checked your payslips to confirm that your tax code was indeed 815?

Samsonite1

agrinnall wrote: »

Check your (no doubt meticulously filed) records for the P2 Coding Notice that explains why your previous personal allowance was £8151. Have you actually checked your payslips to confirm that your tax code was indeed 815?

This is about my P2 - meticulously filed on my desk as I got it today! It says nothing about previous personal allowance.

My previous P2 Coding Notice (meticulously filed with my tax documents) says that my tax code for 2015/2016 is 1060L. My payslips say 1060L.

My total income last tax year was around £80k. This year it will be a little more, depending on my bonus which I have not received yet, but it will not be much more. I am not sure how they could predictively decide I was going to earn more than £100k in any case?

xylophone

Do you have your P60 for 2014-15?

http://www.icalculator.info/news/2013_P60_check_your_tax_return.html

Samsonite1

xylophone wrote: »

Do you have your P60 for 2014-15?

http://www.icalculator.info/news/2013_P60_check_your_tax_return.html

I do indeed. That actually says my final tax code was 959L M1, but I am still seeing no evidence as to why my personal allowance starts as £8151 (minus underpayment) for the next tax year?

dori2o

Samsonite1 wrote: »

I do indeed. That actually says my final tax code was 959L M1, but I am still seeing no evidence as to why my personal allowance starts as £8151 (minus underpayment) for the next tax year?

Firstly can you confirmthat we are discussing a change to the 2015/2016 tax code and not the provisional code issued for 2016/2017.

Have you recently completed a Self Assessment form?

If you have then the auto coding system will take the information from your tax return and update the tax code to reflect the circumstances in the tax return. This will include using non coded income such as interest, dividends,property income, self employmentprofits,tocalculate your total taxable income.If this is more than £100k then it will reduce the tax code even if the source where the code is being operated doesn't have an incomein excess of £100k

Generally if you have made no other contactwith HMRC then the only thing that would generate an in year change of tax code would be information received from your employer, or the auto coding update of the paye system following submission of a tax return.

If it's not due to a self assessment taxr eturn then the other explanation is information from your employer.

Have you changed employers in this tax year? If so then there is a kinown problemwhere the PAYE system use the P45 data to estimate your earnings for the first employer, but the 2nd employment will not pro rata the estimated income and so it puts in the full years salary. This could lead to the systemregistering an estimated incomein excess of £100k and therefore reduces the PA to suit.

Best thing to do is contact HMRC by phone and give them an upto date estimate for your income. Nobody on the forumwill be able to say exactly why this has happened, you need someone to look at your records to see what has changed.