HMRC changed my personal tax code, why?

uknick

At the start of this tax year HMRC told me my allowance for the year would be £10,500, made up from

personal allowance £11,500
add savings allowance £1,000
less expected savings income £2,000

Now they tell me it's gone back to £11,500.

When I look at my HMRC personal tax account no explanation is given other than I have the £11,500 personal allowance.

I've no issue with only having £11,500 as I do a SA each year so will pay/receive any tax differences when I submit.

But, I'm curious why they've made the change. Anybody on here experienced this?

Dazed_and_confused

Have you recently sent them your 2016:17 tax return?

And if you look on your personal tax account on gov.uk you can see more detailed information about what payroll details your employer or pension company have been sending HMRC.

Most likely explanation is that HMRC don't think you will have any tax to pay on your savings interest. Which could be for one of two reasons, your savings interest has reduced or your savings interest has stayed the same but your PAYE income has reduced so there is now no tax to pay on the savings interest.

And there isn't actually any savings "allowance", all savings income which was previously taxable still is taxable but some can be taxed at 0% rate of tax

uknick

It did change after I'd submitted my return for 16-17, but the interest declared there exceeded £2k, which is about the same it was for the previous year. In addition my pension will go up in 2017-18.

My personal account just says tax code calculated on the personal allowance alone. In April, as I said, it had taken into account £2k of savings income. £ to a p, it'll change again during the year.

I stand corrected on the terminology, but you're right to point it out as tax is all about pedantry

Dazed_and_confused

It is probably something to do with your pension income then. HMRC get real time information now from pension companies so if your pension income appears low that may be what has caused the change.

What does your personal account show for your pension? Mine has an estimate of what HMRC think it's going to be which seems to be based on the payslip info submitted so far this year.

Pedantry is all in the eye of the beholder! An elderly married pensioner with a decent (but not massive) pension who has £1000 interest which they think is "tax free" by virtue of the Personal Savings Allowance will be somewhat disappointed when they discover that the "allowance" has not stopped them from having £1000 extra taxable income and as a consequence an extra £50 added to their tax bill