Tax code, seems to be incorrect

ndi149

Hi

I currently owe £240 to the taxman for year 2018/2019, for the Higher Income Benefit Charge.

As I’m currently on mat leave, not due back to work until October, I requested that the money be taken out of my 2020/2021 allowance.

I’ve just been sent the new code and, which is 1129L, based on a tax free allowance of £11,297, the letter says they acknowledge I owe £240 and my tax allowance is being reduced by £1,203.

Sorry if this a stupid question, but why is my tax code not 1226L based on a tax free allowance of £12,260?

kuratowski

20% of 1203 is £240.60 so the code is collecting an extra £240 worth of tax. Don’t ask me about the odd 60p, though!

molerat

An income of £1200 is needed to collect tax at 20% of £240 so they reduce your code by that £1200

ndi149

Oh, I see now, thank you for explaining Kuratowski and molerat

Dazed_and_confused

Although, as someone potentially liable to the High Income Child Benefit Charge it might be more common for the adjustment to be £600. Which at 40% collects £240.

Maybe all is correct and it's just a sign that the "High Income" part of HICBC is no longer quite the High Income it was back in 2013?

Or I should have noticed the maternity leave comment in the op!

ndi149

Dazed_and_confused wrote: »

Although, as someone potentially liable to the High Income Child Benefit Charge it might be more common for the adjustment to be £600. Which at 40% collects £240.

Maybe all is correct and it's just a sign that the "High Income" part of HICBC is no longer quite the High Income it was back in 2013?

Or I should have noticed the maternity leave comment in the op!

Hi Dazed and Confused, my normal salary is £49,000, so just under the higher income threshold. It was a bonus that pushed me over in 2018/2019.

After maternity I won’t be returning full time, probably back four days part time, so even if I’m lucky to get a generous bonus, should never breach the threshold again. HMRC closed my self assessment account, as they seem happy with the explanation, but will just reopen if I do go over again.