Tax code personal allowance

polymaff

Mr_Pegs wrote: »

I wonder if you know what is involved in the self assessment process is it tiresome or straight forward process. I could ask HMRC however some I have spoken to in the recent past appear not to trained well enough to answer some questions so a bit of guidance would help me should I take this path of self assessment

I find it easy and am motivated by wanting to be in charge of the process. When I submit an SA each year then as far as I am concerned, that is the document of record.

When you do SA, HMRC reports its analysis of your data just before you submit it. This helps to flush out any errors you may have made before you commit. Of course - and this has beem so common in recent years - this analysis also helps you to spot HMRC errors.

I reckon that HMRC are less likely to challenge an SA - they don't challenge mine - at least not to date - and I choose options which optimise the use of coding and the lateness of the settlement date - not them.

That's not to say it will always be like this. HMRC's "The Death of the Annual Self Assessment Return" slogan shows that they want to withdraw SA as soon as they can and make us all subject to their Brave New World of MTD.

That'll be a disaster - I'm sure - as you are seeing int the way that HMRC are now abusing two once-respectable processes:

1. The P2 Coding Notice - once a harmless and helpful notice to your PAYE-based payers, now a tool to empty your wallet for no tenable reason, and,

2. Payments on Account - once a process whereby those with significant non-PAYE income did not get too big an advantage over their PAYE counterparts - now a scheme, as I explained previously, to extract tax in advance of reliefs and allowances.

By the way, your case it typical of many I know of. You might like to know of an even more pernicious variation on the same perversion. If you regularly have significant non-coded income you are regularly handing over significant sums of money one year in advance of when you used to, due to the conventional PoA rules. Using the same logic that is hitting you, and which I detailed previously, HMRC are not recognising that it is COMPLETELY dishonest of them, once having taken Payments on Account for the forthcoming year to then try to get that tax - and that tax unrelieved, to boot - through the same process that they've been hitting you with.

You can imagine that I rammed them backwards on this one - but it is this completely irresponsible attitude of HMRC which means that, whilst we have the annual SA tax return, it is not a bad idea to use it.

What was it that Stanley Baldwin said? Something like:

"Power without responsibility – the prerogative of the harlot throughout the ages"

Then, it was the press, today - HMRC.

xylophone

For those with only savings income

https://www.moneywise.co.uk/work-family/pay-less-tax/im-retired-if-i-earn-over-1000-interest-will-i-have-to-pay-income-tax

Mr_Pegs

vic_sf49 wrote: »

I clearly don't understand how interest is taxed either. I've had a similar tax code change.

Old personal allowance £11850.
New one is £10373. (for Jan - Apr 2019).

Pension £9000 (near as dammit).
Interest £1477.

So my new allowance / tax code was simply derived by taking the interest away from the old code.

I don't understand why any of the savings allowances were not factored in, and the lady at HMRC was also confused.

The code affects nothing right now, but if I were to get a job, it would.

So Dazed and Confused, can you help please. Should my tax code have been changed? Can you explain it before I go insane please.

vic_sf49, perhaps do a formal compliant as I have who knows if many complain some changes may happen who knows. I spoke with 3 members of staff at HMRC all were confused one lady said it is wrong yet right! saying she would feed this up to her manager. One male manager I spoke with was unable to answer my questions with lots of pregnant pauses during my asking questions he couldn't answer.My comments serve no real purpose except I fear many will shortly find they are in the same boat sadly

vic_sf49

Mr_Pegs wrote: »

vic_sf49, perhaps do a formal compliant as I have who knows if many complain some changes may happen who knows. I spoke with 3 members of staff at HMRC all were confused one lady said it is wrong yet right! saying she would feed this up to her manager. One male manager I spoke with was unable to answer my questions with lots of pregnant pauses during my asking questions he couldn't answer.My comments serve no real purpose except I fear many will shortly find they are in the same boat sadly

I read another thread Mr Pegs, where someone had linked to the HMRC document that they work / train from.

After working through the given example, I believe you're right, and I believe that I'm right; and that the tax codes should not have changed, but was after a sanity check from Dazed and Confused.

I'm going to leave it to see if anything changes in April, but if my tax code / allowance stays reduced, I'll definitely be calling back, especially as I now have the terminology that HMRC are supposed to understand.

Mr_Pegs

vic_sf49 wrote: »

I read another thread Mr Pegs, where someone had linked to the HMRC document that they work / train from.

After working through the given example, I believe you're right, and I believe that I'm right; and that the tax codes should not have changed, but was after a sanity check from Dazed and Confused.

I'm going to leave it to see if anything changes in April, but if my tax code / allowance stays reduced, I'll definitely be calling back, especially as I now have the terminology that HMRC are supposed to understand.

vic_sf49 Can you please share the terminology re HMRC so I can use it too. If you have an online you can see your next years tax allowance /code etc just click PAYE and you will see the tab to look good luck..Can you please add a link to the 'thread' you are referring to with examples may prove helpful thanks

vic_sf49

Mr_Pegs wrote: »

vic_sf49 Can you please share the terminology re HMRC so I can use it too. If you have an online you can see your next years tax allowance /code etc just click PAYE and you will see the tab to look good luck..Can you please add a link to the 'thread' you are referring to with examples may prove helpful thanks

The following is what I've copied from the other thread.... "If you want to see a similar worked example in one of HMRC's in-house manuals, read from the heading "Untaxed Interest" in:

https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye12060

I found it in on page 24, post #467 of this thread..

https://forums.moneysavingexpert.com/discussion/5342041/personal-savings-allowance-guide&highlight=tax+code#topofpage

Dazed_and_confused

I have checked my tax code for the up and coming tax year starting 6th April 2019 and I have been give a tax code of of 1220L.

I explained to the tax office that it was my understanding that basic tax payers can earn up to £1000,00 tax free over that amount you are taxed on the extra they agreed

Pension under £12,000 not employed at present plus saving this time next year ( non isa's only listed here ) I will have £ 660.00 in interest as of this time next year assuming I don't spend any capital coupled with interest rates that can change any thoughts?

Initial thoughts. You have totally and utterly misunderstood your own tax position. And HMRC appear to have compounded this by not being able to satisfactorily explain why your tax code is correct.

First thing. Forget about the Personal Savings Allowance of £1,000. You cannot benefit from this. Simply because you have no need to.

You appear to be complaining to HMRC that they have sent you a tax code which will result in the correct amount of tax (zero) being deducted from your pension. Heaven help them if they ever send you a code which means you will pay the wrong amount of tax.

Your tax code is 1220L. You say your pension is less than £12,000. With a tax code of 1220L your pension company can pay you £12,209 by the end of the 2019:20 tax year and no tax would be deducted.

The reality is that your income is so low that your saving interest is not liable to be taxed because you have spare Personal Allowances available. After your Personal Allowance is used up you would move onto the savings starter rate of tax where upto £5,000 of interest is taxed at a 0% rate. Only after that does the savings nil rate (aka Personal Savings Allowance) apply.

If you update HMRC with details of the £660 interest you expect to receive in 2019:20 then the impact on your tax code will depend on exactly how much your pension is. If it is expected to be £11,840 or less then your tax code will be reduced by £660 from 1250L down to 1184L. And your pension company still wouldn't deduct any tax. It would be different if your pension was between £11840 and £11,999 but you still shouldn't end up with a tax code which results in any tax being deducted from your pension.

Perhaps you could explain exactly what it is about a tax code that ensures you pay the correct amount of tax (zero) concerns you so much?

Dazed_and_confused

If they are not going to change your tax code, you should complain to HMRC using their formal complaint process. Your complaint is that they are forcing a prepayment when there is no expectation of a future tax liability OR that their staff cannot explain why they have a right to a pre-payment when there is no expectation of a tax liability.

Perhaps you could explain how a tax code of 1220L will result in any tax being paid when the pension is less than £12,000?

Dazed_and_confused

I wonder if you know what is involved in the self assessment process is it tiresome or straight forward process. I could ask HMRC however some I have spoken to in the recent past appear not to trained well enough to answer some questions so a bit of guidance would help me should I take this path of self assessment

Why on earth would you want to complete a Self Assessment return?

You are not going to have paid any tax. And are not going to need to pay any. So what would be the point of filing a tax return?

Dazed_and_confused

I clearly don't understand how interest is taxed either. I've had a similar tax code change.

Old personal allowance £11850.
New one is £10373. (for Jan - Apr 2019).

Pension £9000 (near as dammit).
Interest £1477.

So my new allowance / tax code was simply derived by taking the interest away from the old code.

I don't understand why any of the savings allowances were not factored in, and the lady at HMRC was also confused.

The code affects nothing right now, but if I were to get a job, it would.

So Dazed and Confused, can you help please. Should my tax code have been changed? Can you explain it before I go insane please.

You are confusing your tax code and your Personal Allowance. Only someone with income in excess of £100,000 could have a Personal Allowance of £10,373.

You almost certainly don't have sufficient income to be able to make use of the savings nil rate of tax (commonly known as the Personal Savings Allowance).

If your tax code is 1037L and pension is £9,000 then you won't be paying any tax on the pension.

Can you explain what you think is wrong with the tax code?