Tax Code Help

SpeedSouth

Hi,

Didn't receive a reply to this in the Cutting Tax board so trying this given people on this one seem pretty clued up on tax codes, and their are pension parts to the question.

Just received my 2016/7 tax code through following my SA.

I'm wondering if they have it right. It seems weighted in my favour so don't want to under pay for the year.

I earn £45,000, so technically a HRT on a small amount, however I contribute via salary sacrifice 13% of this, which as I understand more than takes me back to BR payer. I was under the impression that contributing via salary sacrifice I didn't have to complete a SA or tell the IR as it just reduces my salary, and I wont pay any 40% tax. I've as well though had added to my tax code a Personal pension relief of £450 which in the notes alludes to the portion at 40%. (I can only assume this has come about following my SA as I've not asked for this)

Last year given I was not on salary sacrifice with my previous employer I made SIPP contributions to offset the 40% as I earned £50,000 last year.

As well I have marriage allowance transferred from my partner. I applied for this last year when I was only earning £35k. (Redundancy payout is the £15k uplift to total earnings last year). Is the MA the same deal whereby any contributions to pension funds are essentially reducing your gross income (the same as people do to maintain child benefit?)

To my mind I don't think I should have personal pension relief. The MA may or may not be due if my gross is reduced as per SS?

Since posting the last thread it has been flagged to me that I may get expenses added to my P11D as well. My contract says home is place of work, yet I do 2-3 days in the office usually. I've been in the job 8 months now and nothing hits my P11D as yet, but I've been told that should this arrangement continue HRMC can say that all the expenses I am paid (inc hotel, travel, meals) could be deemed as a taxable benefit. This of course will hit my yearly take home.

Hope that makes sense

jamesd

No surprise that there's been a mistake. They seem to have counted your salary sacrifice pension contributions as normal ones not happening via salary sacrifice.

To fix that one often easy way is to visit your Personal Tax Account, You'll find an option there to ask for a change in your tax code. There's a comment box as part of it, would be useful to mention that you're doing it to correct 450 of personal pension relief because all of your contributions are via salary sacrifice and need no further adjustment.

But I'm not sure that you need to do that. This is because of last year. It might be relief set up via the tax code to give you relief you didn't get last year. Given this, it's probably better to phone HMRC at or just before 8AM if you're able to do it then. that's because it tends to be a less busy time of day. Then you can ask them if it's for last year or this year. Have your anticipated income for this year after sacrifice to hand and they will probably generate a new tax code for you during or just after the call.

Another possible way is to use the self-assessment secure message facility. You might also look there to see why they say they have made the adjustment. You can normally find copies of coding notices online there and that may get you the answer to your question without a phone call.

Marriage Allowance transfer increase your personal allowance. So doesn't reduce income but does reduce the part subject to income tax.

There have been changes this year to how travel and hotel can be considered, notably for contractors. Best to ask just about this over in the tax board. I don't know the answer, just that it's become harder to claim.

SpeedSouth

jamesd wrote: »

N
Marriage Allowance transfer increase your personal allowance. So doesn't reduce income but does reduce the part subject to income tax.
.

Thanks for all that.

On this point though, I realise it increases my personal allowance, but by salary sacrificing does that in effect reduce my gross salary. My gross is £45k (so above the threshold allowed for MA transfer), but with salary sacrifice I'm earning less than £40K.

Thanks

jamesd

Yes, salary sacrifice reduces your gross salary. Your payslips may show a convenient taxable pay entry that is the after-sacrifice amount. Or indeed they might not even have the pre-sacrifice amount on them at all.