IPA - Advice

cbatflash

Hi,

This is my first post/question here, you all seem to be very knowledgeable, so here's my query/quandary.

I am being made bankrupt by HMRC.

I currently earn £180 per day - IT Tech support. - 13 days x 180 = £2340 - Before tax.
I only work 3 days a week.

I've calculated an SOA, which comes out to: £1644

So, my question is: Can I ask to have my daily rate lowered, so I then fall under the SOA projection?

Bearing in mind, they might put me on a zero tax code if my wage is not sufficient, but, if it's not sufficient even with the tax waived, will they then not waive the tax?

Leaving me with substantially less, once that new lowered wage has been taxed.

i.e. £1644 - new adapted daily rate (£125 per day)
With tax through umbrella (PAYE) - estimated £1200 pm

I'm fine being on next to nothing in the way of spare money for the year, if it helps me avoid an IPA and three years of repayments/stress. - Instead of being free from it.

My only alternative I can see if they still may issue me with an IPA is quit my job then acquire one that covers the bare minimum.

SOA BELOW

Any thoughts?

Huge thanks in advance for anyones time.

Kind regards

Lee

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Statement of Affairs & Personal Balance Sheet
Summary
Monthly Budget Summary Amount(£)
Total monthly income 1,625
Monthly expenses (incl. HP & secured loans) 1,644
Available for debt repayments -19
UNsecured debt repayments 0
Amount short for making debt repayments -19
Personal Balance Sheet Summary Amount(£)
Total Assets (things you own) 0
Total Secured & HP Debt -0
Total Unsecured Debt -0
Net Assets 0
Income, Expense, Debt & Asset Details
Income Amount(£)
Monthly income after tax 1625
Partners monthly income 0
Benefits 0
Other income 0
Total monthly income 1625
Expenses Amount(£)
Mortgage 0
Secured/HP loan payments 0
Rent 650
Management charge (leasehold property) 0
Council tax 60
Electricity 30
Gas 30
Oil 0
Water Rates 20
Telephone (land line) 0
Mobile phone 35
TV Licence 13
Satellite/Cable TV 0
Internet services 15
Groceries etc. 400
Clothing 40
Petrol/diesel 0
Road tax 0
Car Insurance 0
Car maintenance (including MOT) 0
Car Parking 0
Other travel 231
Childcare/nursery 0
Other child related expenses 0
Medical (prescriptions, dentists, opticians etc.) 20
Pet Insurance/Vet bills 20
Buildings Insurance 0
Contents Insurance 0
Life Assurance 0
Other Insurance 0
Presents (birthday, christmas etc.) 10
Haircuts 10
Entertainment 0
Holiday 50
Emergency Fund 10
(Unnamed monthly expense) 0
Total monthly expenses 1644
Secured & HP Debt Description Debt(£) Monthly(£) APR(%)
Mortgage 0 (0) 0
Secured & HP Debt totals 0 - -
Unsecured Debt Description Debt(£) Monthly(£) APR(%)
Unsecured Debt totals 0 0 -
Asset Description Value (£)
Cash 0
House Value (Gross) 0
Shares and bonds 0
Car(s) 0
Other assets (e.g. endowments, jewellery etc) 0
Total Assets 0

terrence45

I believe an income tax IPA is totally separate to a regular IPA, so your tax code will be set to zero whatever happens and the money diverted (somehow) to the OR. If you get an income tax IPA it's just for one year (or until you change jobs) and doesn't tie you into a regular IPA, so I think you're alright. Others will clarify.

Your water/gas/electric are all quite low - which is good but is it realistic, for any price increases/cold winter etc?

I remove holiday altogether and up emergency fund to £20, haircuts to £15, medical to £40 (think opticians, dentist...), clothing to £50. Just messing around but these were my figures and weren't questioned - I always worry about the holiday one.

Minkym00

When you are bankrupted HMRC will set your tax code to nil. Any tax you’ve paid from the current tax year so far will then be sent to the OR. You then get the benefit of nil tax which, assuming that puts you in a surplus position (which you are in anyway) will be claimed by the OR via an IPA until the end of the current tax year or until you change jobs.

You could ask your employer to reduce your daily rate I suppose. But the OR will likely ask for bank statements and may question the drop in income. But, to be honest, if you just say your employer lowered it (come up with a good reason) then they’ll have to accept it.

If you are solely naked on your council tax then that gets written off too and also claimed for the balance of the tax year under an IPA. But only if there are no other adults in the household.

Minkym00

*named, not naked!!

terrence45

Minkym00 - the surplus caused by the nil tax code would trigger an IPA but it would be a temporary one which only takes the tax owed and lasts only until the tax code changes (due to change of job, end of tax year etc). The order would then stop, unless there is other surplus income to trigger a regular IPA, which I don't think the OP has.

With either daily rate the OP is suggesting, he will have to pass what is owed in tax to the OR every month. They won't waive it just because his SOA is a certain amount - he will have to amend his SOA to a realistic, liveable figure or won't be allowed to to bankrupt. At the moment it looks broadly OK.

(I think I'm right but do check. Worst comes to worst, if the OR is not playing ball then enact the lower daily rate after bankruptcy but before signing any IPA and inform the OR about a change of circumstances, thereby avoiding the IPA.)

vixg66

I don't know if you pay into a pension (not listed that I can see) would it be worth keeping your rate as it is and also starting a pension? I've just asked the OR if it's ok for me to start paing into my work pension (I didn't do this when in massive debt). She said it's fine even though it means I now won't have any income left over to pay my IPA. I'm now saving for retirement and don't have an IPA to deal with so hopefully will all be done and dusted with the OR by January 2020.

luvchocolate

Good point about the pension I paid 8% into mine with no problem at all,wish I could have afforded more.