Change in tax code. Why?

molerat

Don't confuse your personal allowance with you tax code.  Your personal allowance is £12500, your tax code is merely a way of trying to collect the correct amount of tax taking into account other factors.  I do admit though that deducting an income that will not be taxed from the tax code because your total  income is below your personal allowance does seem a bit of a weird thing to do but who ever said the tax system followed logic.

Jeremy535897

molerat said:

Don't confuse your personal allowance with you tax code.  Your personal allowance is £12500, your tax code is merely a way of trying to collect the correct amount of tax taking into account other factors.  I do admit though that deducting an income that will not be taxed from the tax code because your total  income is below your personal allowance does seem a bit of a weird thing to do but who ever said the tax system followed logic.

If the pension did end up at say £12,450 in March and the code was still 1238L, unnecessary tax would be collected because the code wouldn't change in time to deal with it. Then a repayment would arise.

sheramber

It is the standard way HMRC  are dealing with untaxed interest now.
In some cases they seem to use random estimated figures.

Steve_L

sheramber said:

It is the standard way HMRC  are dealing with untaxed interest now.
In some cases they seem to use random estimated figures.

The first answer that I can understand.

I can also understand why HMRC chose to do it this way: if no-one knows what's right, no-one can tell when you get it wrong.

chrisbur

Steve_L said:

sheramber said:

It is the standard way HMRC  are dealing with untaxed interest now.
In some cases they seem to use random estimated figures.

The first answer that I can understand.

I can also understand why HMRC chose to do it this way: if no-one knows what's right, no-one can tell when you get it wrong.

When all the figures are in after the tax year end HMRC will check the tax paid and adjust if necessary.  You can also check this yourself when you have all the figures and if you still cannot understand it there are several on this site who will check the figures for you.