Anyone able to help with a k code query?

Poppie68

As above... husband been told he has k code...nearly £19k off untaxed income apparently.

Darksparkle

Some info here on K codes - https://www.gov.uk/tax-codes/letters-in-your-tax-code-what-they-mean

What is your partners situation?

dano17439

I would double check HMRC figures. I got a letter once from them stating I owed about 16k in unpaid taxes. I phoned them and said it was impossible, I heard him type away and then casually say sorry about that, the letter was sent in error

Poppie68

Thanks both of you.....he's been trying to get through to them all morning...

He's got an army pension which he uses his tax free allowance on and pays BR on his wage. He has medical insurance and receives an amount each month instead of taking a company car.


The tax code notice is as follows...





Personal allowance....£11000
Total....11000
Less medical insurance....520
Less adjustments to rate bands......28618
18138 to be added to your wages,salary or pension


MOD pension......18138 is added to this income....... tax code......K1812

'Employer' 0 of this income is tax free.......BR

This totals your tax free amount....-18138





Anyone any ideas?

dori2o

Poppie68 wrote: »

Thanks both of you.....he's been trying to get through to them all morning...

He's got an army pension which he uses his tax free allowance on and pays BR on his wage. He has medical insurance and receives an amount each month instead of taking a company car.


The tax code notice is as follows...





Personal allowance....£11000
Total....11000
Less medical insurance....520
Less adjustments to rate bands......28618
18138 to be added to your wages,salary or pension


MOD pension......18138 is added to this income....... tax code......K1812

'Employer' 0 of this income is tax free.......BR

This totals your tax free amount....-18138





Anyone any ideas?

That would suggest that his total income when added together is in excess of the 40% tax threshold, but neither of them on their own are.

If both sources were issued with a normal tax code, i.e. BR at the employment and 1048L (11000 personal allowance less 520 medical benefit), then your husband would underpay tax as he would receive the benefit of too much of his income being taxed at just 20%, in fact he'd probably not pay any tax at the 40% rate.

So what happens is the PAYE system introduces an adjustment to the tax code in order to ensure that the necessary amount of income due to be taxed at the 40% rate is collected.

Ideally he should have his tax code set against the source with the largest income (although it is his choice where the allowances are allocated). If this is not currently the case then it may explain why the basic rate restriction is so high.

The only other way around this is to overpay tax throughout the year and then claim it back at the year end. This would be done by having the normal tax code with the MOD and a code of D0 at his employment (or vis-a-vis) which would collect tax at 40% rather than at 20%.

If his income is not over the 40% tax level then he needs to contact HMRC and give them an up to date estimate of his income from both sources.

Can you provide details of how much income each source pays to your husband?

Poppie68

Thanks dorio ...
He was advised 2 years ago by the tax office to have his allowance on his pension, we have found out a few others were advised the same. He does pay 40% through his employment while that's set at BR.

The last 3 years he received notification of underpaid tax which they asked for direct payment and not to be collected through his pay, it totalled approximately£4000 which he paid.

The health benefits and car have only been part of his contract for the last 8 months if that makes any difference?

His pay office are struggling to find any errors in his tax payments and are totally baffled over all the underpayments and nobody else going through the same payroll have had any problems.


In 33 years he's been employed he has never had a rebate but for someone reason they are telling him year after year he has under paid.

It's a mine field!



Sorry forgot!!! ...Pension......,£10,500. Employment...... Is approx £36,000 + car allowance of approx £3,800

jem16

Poppie68 wrote: »

Thanks dorio ...
He was advised 2 years ago by the tax office to have his allowance on his pension, we have found out a few others were advised the same. He does pay 40% through his employment while that's set at BR.

They have possibly said that as it's going to be permanent whereas his employment will not. A BR tax code will only see 20% tax being taken off, not 40%.

The health benefits and car have only been part of his contract for the last 8 months if that makes any difference?

A bit but not much.

His pay office are struggling to find any errors in his tax payments and are totally baffled over all the underpayments and nobody else going through the same payroll have had any problems.

There are no errors with tax via work. The issue comes about from the two income sources together and work has nothing to do with the other one. He's paying tax at 20% when he should be paying some at 40% and this is what is causing the underpayment each year.

Sorry forgot!!! ...Pension......,£10,500. Employment...... Is approx £36,000 + car allowance of approx £3,800

So a total of £50,300 and well into higher rate tax by around £8k on which he's only been paying 20% tax when it should have been 40%. So every year he's underpaying by about £1500 at least.

It could work better by using his main tax code on his employment and having D0 for his pension although that would mean an overpayment each year. Other option is to have the main tax code on his employment with BR on his pension. His tax code would have an adjustment for the higher rate part.

Poppie68

He's definitely paying 40% on his wage, there's no doubt about that payroll confirmed it as do is pay slips. ..He's been paying 40%all along.

He used to have the tax codes the other way round but when he got his first underpayment the tax office advised him to switch but he still got an underpayment for 2 years after so that didn't work.

jem16

Poppie68 wrote: »

He's definitely paying 40% on his wage, there's no doubt about that payroll confirmed it as do is pay slips. ..He's been paying 40%all along.

You said his tax code was BR on his employment - is that correct?

If it is BR means Basic Rate which is 20% so there is no way he's paying 40% tax.

Poppie68

jem16 wrote: »

You said his tax code was BR on his employment - is that correct?

If it is BR means Basic Rate which is 20% so there is no way he's paying 40% tax.

Definitely paying 40% on his BR...

jem16

Poppie68 wrote: »

Definitely paying 40% on his BR...

As I have already said, BR means 20% tax so definitely not paying 40% tax if that is his tax code. He would also be massively overpaying tax not underpaying.

I'm not sure what else to say to you if you won't believe what I'm saying regarding the tax code.

Post the figures and tax code from one of his payslips so we can see what's going on.