IPA, council tax and NT code

Team_AA

Hi,
I was made BR in July. I currently pay Clarke Wilmot the amount I should be paying in council tax and the tax that I would normally be paying over through PAYE.
Come April I will start paying Tax again through my employment and my council tax will restart. Could anyone advise me if I will still have to pay the money to Clarke Wilmot as well as council tax and PAYE deductions.
Many thanks

National_Debtline

Hi there,


When you receive your new council tax bill you should contact Clarke Wilmot so they can adjust your budget sheet and this should reduce the payments you are making.


Your nil tax code on your pay should run until you are discharged from bankruptcy as opposed to the end of the tax year. So you shouldn't pay income tax again until July 2017 unless you are being discharged early (which is very rare now a days). Good luck,



EDIT - Your nil tax code will run until the end of the tax year.

Laura
@natdebtline

debt_doctor

National_Debtline wrote: »

Hi there,


When you receive your new council tax bill you should contact Clarke Wilmot so they can adjust your budget sheet and this should reduce the payments you are making.


Your nil tax code on your pay should run until you are discharged from bankruptcy as opposed to the end of the tax year. So you shouldn't pay income tax again until July 2017 unless you are being discharged early (which is very rare now a days). Good luck,


Laura
@natdebtline

31.7.63 Income arising from nil tax (NT) coding
Where bankruptcy occurs, HMRC submits a claim in the bankruptcy proceedings for the whole of the outstanding tax due in that tax year, for both employed and self-employed individuals. The claim submitted in the proceedings by HMRC is dealt with in the same way as any other unsecured creditor. Where a bankrupt is employed on a PAYE basis he/she will have a tax code issued to them which enables their employer (or pension provider) to calculate the amount of tax to deduct from their salary. Where a bankrupt is in PAYE employment at the date of bankruptcy and remains with the same employer, HMRC applies a nil or no tax (NT) code to the bankrupt's salary for the remainder of the tax year in which the bankruptcy order is made, as a consequence of submitting its claim for outstanding tax in the bankruptcy proceedings. The NT code is applied to all income earned by the bankrupt after the bankruptcy order date, either until such time as there is a change in the bankrupt's source of income (i.e. he/she obtains a new job with a different employer, see paragraph 31.7.65), or until the end of the tax year in which the bankruptcy occurs, whichever event is the earliest. This means the bankrupt does not pay any tax on his/her income whilst the NT code is in force and so receives additional income which can be included in the income payments calculation.


Your NT tax code will end April 6th 2017.
DD

TheGardener

National_Debtline wrote: »

...Your nil tax code on your pay should run until you are discharged from bankruptcy as opposed to the end of the tax year. ...

Laura
@natdebtline

No no no! Laura - please go and read the manual again...see DD's reply.

TheGardener

Team_AA wrote: »

Hi,
I was made BR in July. I currently pay Clarke Wilmot the amount I should be paying in council tax and the tax that I would normally be paying over through PAYE.
Come April I will start paying Tax again through my employment and my council tax will restart. Could anyone advise me if I will still have to pay the money to Clarke Wilmot as well as council tax and PAYE deductions.
Many thanks

Come April - you will stop paying CW's your tax money and start paying your tax normally though your employers payroll. Unfortunately Laura from Natdebtline is mistaken on that one. You will have a normal tax code from the start of the new financial year in April.
Are you sure you are paying council tax to CW? - you shouldn't be. All the CT owed for the current financial year (and any previous years arrears) should fall into your BR so it becomes just another debt cleared by BR. In April, your CT will be paid to your council.
Only if you have an IPA which is 'surplus' income - you will continue to pay that for 3 years (36 monthly payments) These payments would continue to be paid to CW. If your circumstances change for the better or worse - you must contact the OR and ask for a review of your payments.
Check your paperwork from the OR to see if you have an IPA - if in doubt call the OR.

LEK

TheGardener wrote: »

Come April - you will stop paying CW's your tax money and start paying your tax normally though your employers payroll. Unfortunately Laura from Natdebtline is mistaken on that one. You will have a normal tax code from the start of the new financial year in April.
Are you sure you are paying council tax to CW? - you shouldn't be. All the CT owed for the current financial year (and any previous years arrears) should fall into your BR so it becomes just another debt cleared by BR. In April, your CT will be paid to your council.
Only if you have an IPA which is 'surplus' income - you will continue to pay that for 3 years (36 monthly payments) These payments would continue to be paid to CW. If your circumstances change for the better or worse - you must contact the OR and ask for a review of your payments.
Check your paperwork from the OR to see if you have an IPA - if in doubt call the OR.

Pretty much this, but also in my case when I was made BR in July of last year my Council Tax was suspended & written off immediately, also I've been on an NT tax code since to which I've also been paying my monthly salary tax money manually to C&W.

However, since December I have had to start to pay Council Tax again as I moved property in November and the new council tax bill on the new property is still liable to be paid despite me being BR. So be sure to take note of this if you do move between now and April. Upon notifying my OR & C&W of this last month I was informed that my NT IPA would remain unchanged as the money that is taken is solely from my tax, so it isn't actually affecting my actual gross income.

Liam.

CIS

However, since December I have had to start to pay Council Tax again as I moved property in November and the new council tax bill on the new property is still liable to be paid despite me being BR. So be sure to take note of this if you do move between now and April.

A lot of people miss that fact. Similar can also happen where the council revise a decision retrospectively and create a new charge (that didn't exist when the bankruptcy occurred).

Craig

LEK

CIS wrote: »

A lot of people miss that fact. Similar can also happen where the council revise a decision retrospectively and create a new charge (that didn't exist when the bankruptcy occurred).

Craig

Precisely - I discovered this when I challenged my new Council Tax bill upon moving into the property with my local council, even the lady on the phone wasn't 100% sure but then she put me through to her manager who thoroughly went over how it works and it does make sense in reality.

Liam.

Team_AA

I pay CW the amount I would normally pay in council tax had it not been written off for the year.

TheGardener

Team_AA wrote: »

I pay CW the amount I would normally pay in council tax had it not been written off for the year.

ok - so when you do start to pay CT again, this 'surplus income' will may no longer be paid? You need to clarify this with the OR.

National_Debtline

Hello all,


I would like to apologise for my earlier mistake and thank everyone for ensuring the OP got the correct information. I have amended my earlier post to avoid any confusion in the future.


Laura
@natdebtline