Has anyone here done this?

molerat

Blue_Parrot wrote: »

Is M2 month two? Then we're in month two since it's May, yes?

I've just emailed all that to our accountant.

The P45 should have the tax code and the month (or week) number used.

Blue_Parrot

Both P45s show tax code applied of 1100L w1/m1

molerat

2 separate payments have obviously skewed the figures giving the impression of a M2 payment, 2 separate monthly allowances and 20/40/45% tax thresholds.

Blue_Parrot

With respect, I think that's a red herring.

I've found this calculator online.

https://www.scottishwidows.co.uk/secure/retirement-planning/calculators/tax-calculator/



From that, the taxable is exactly correct, but not enough tax has been taken. £1,118 or so. This is also the difference between their calculated payout, and what was paid out, to within a pound or two.

On the other hand, they shouldn't be charging at 45% anyway (in the opinion of anyone reasonable), so maybe it all works out in the wash?

What I conclude so far is:
They haven't charged enough tax.
They've charged too much tax.
They paid out more than I'd anticipated because they haven't charged enough tax.
Some tax will have to be repaid because they haven't charged enough.

GEE, this is fun! (Making a joke is better than getting :mad: about it.)

molerat

You need to put each separate P45 gross figure into the calculator to get the correct outcome. If one of the payments was over £13417.43 gross then some 45% tax will have been paid.

Blue_Parrot

Great Jumping Jehosaphats, molerat, at last something which adds up!

Thanks have duly been made.

By entering each amount separately, I now see :T that no 45% tax has been deducted, and that two total taxes deducted, add up to what they said.

I thank you for [STRIKE]making me do that[/STRIKE] pointing me in the right direction to finally understand their figures. Personally, I'm ok with this result. But of course, nevertheless and notwithstanding all this analysis, I'll run it past our accountant at our next meeting in July, and will also hold back £1,000 or so in case HMRC decide otherwise.

Many thanks again for the guidance, I am glad you didn't see my spreadsheet confusion mess. Thanks also to the Scottish Widows tax calculator which beamed a shining light through the confusion, and thanks also to me for never being a quitter.

Blue_Parrot

How very odd. Last time I looked there was a post underneath mine.

Kiwi_g

I've recently retired and decided to withdraw part of my pension pot in cash (calculated to keep me in the 20% band). Despite offering to send a P45 showing a BR tax code, the pension organisation said that HMRC rules meant that they use 1100L month 1 tax code. The payment meant that part of the withdrawal was taxed at 40%. HMRC then almost immediately issued me with a new notice of coding showing the pension drawdown as a BR tax code. Perhaps if I had withdrawn ½ in one month and then the balance after HMRC issued the tax code, I would have been able to get the tax refund much quicker. One drawback was that the HMRC computer thought that the drawdown was a continuing monthly feature and so I had to correct their figures as I don't intend to drawdown any more this tax year as I will suffer 40% tax on it.


As for claiming a refund (P55?), my problem is that HMRC has issued a K tax code to one of my many pension payers whilst last year the code was BR. This pension payer says that HMRC have not notified them of any new tax codes. HMRC says that they have sent out at least 3 notices for 2016-17 - a new one being issued each time when I correct my estimated 2016-17 income (calculated by HMRC's computer?) on my tax details. What a mess !!