NT tax code

creditcardshuffler

I have been reading soooo much it hurts......

I am going to the CAB on Tuesday and have been reading up on things and found this that I don't understand

"When a bankruptcy order is made against an individual who is subject to PAYE, HM Revenue and Customs (HMRC) applies a “nil tax” code to that person for the remainder of the tax year in which they were declared bankrupt and can then claim in the bankruptcy for the amount of tax which would have been collected (plus any other money owed for previous years), as long as the debtor does not change his/her source of income (i.e. gets a new job) during the tax year in which the bankruptcy order was made. "

(found at http://bankruptcy.informe.com/income-payment-agreements-ipas-dt18.html )

Does this mean that ALL BR's get a Nil Tax code for the rest of the tax year and the OR claims this money for the estate or does the BR get this "extra money"

fermi

Not all BR's get the code changed. It sometimes takes a while to sort out, and since it only applies until the end of the tax year (as you say) some people who go BR a short while before the beginning of April escape it

The NT code also finishes if your source of taxable income changes and HMRC have to update. For example changing your job etc....

You don't get to keep the extra money unfortunately.

The whole NT code thing is a bit odd, so I'm not surprised it is confusing.

creditcardshuffler

Thanks Fermi

One of my concerns was that if I suddenly had to pay no tax my income would go up and may be trigger an IPA/O

I havn't done the final list of expenditure/income yet but wanted to get clarification first.

fermi

creditcardshuffler wrote: »

One of my concerns was that if I suddenly had to pay no tax my income would go up and may be trigger an IPA/O

Not going to happen.:D Whether the tax goes to HMRC or your OR/Trustee/RTLU it never forms part of your income that is accessed for an 'income surplus' based IPA.