Splitting tax codes: New source of income half way through tax year

OldBeanz

Wife has a MyCSP pension which she is best to take at 60 which will be in May after the start of the tax year. It will use half her tax allowance. She is still working and is just under the personal allowance. It would suit her to allocate half her tax allowance against this pension so I wondered when she should tell HMRC and is there an online form to do this.

Dazed_and_C0nfused

It can be done however she needs to wait until HMRC have been notified of the first payment from MyCSP.

Once that has happened she can ask for her tax code allowances to be split however she wants.

AFAIK there isnt a form for this and given she wants to pay tax on her existing job she is probably best off speaking to someone (normally HMRC would just allocate the spare allowances to MyCSP leaving her paying no tax on the existing job).

She can check her Personal Tax Account to see when MyCSP have sent details of the first payment to HMRC.

xylophone

https://www.moneyadviceservice.org.uk/en/articles/pay-and-tax-when-working-in-more-than-one-job#:~:text=This%20is%20called%20the%20Personal,can%20split%20your%20Personal%20Allowance.

Richard has two jobs, his main job pays £10,000 a year and his second £9,000.

Both of these are below the Personal Allowance, so he can split his allowance between the two jobs.

He can contact HMRC and get them to transfer £2,500 of unused allowance from his main job to his second job, or he can wait until the end of the tax year and ask HMRC for a refund.

You should only ask for your Personal Allowance to be split if your income from each job is predictable and stable. If it’s not and one job ends up paying you more than expected, you will have underpaid tax.

https://www.gov.uk/government/organisations/hm-revenue-customs/contact/income-tax-enquiries-for-individuals-pensioners-and-employees

Has she set up a personal tax account? https://www.gov.uk/personal-tax-account

And obtained a state pension forecast to help with future planning?

https://www.gov.uk/check-state-pension

OldBeanz

xylophone said:

https://www.moneyadviceservice.org.uk/en/articles/pay-and-tax-when-working-in-more-than-one-job#:~:text=This%20is%20called%20the%20Personal,can%20split%20your%20Personal%20Allowance.

Richard has two jobs, his main job pays £10,000 a year and his second £9,000.

Both of these are below the Personal Allowance, so he can split his allowance between the two jobs.

He can contact HMRC and get them to transfer £2,500 of unused allowance from his main job to his second job, or he can wait until the end of the tax year and ask HMRC for a refund.

You should only ask for your Personal Allowance to be split if your income from each job is predictable and stable. If it’s not and one job ends up paying you more than expected, you will have underpaid tax.

https://www.gov.uk/government/organisations/hm-revenue-customs/contact/income-tax-enquiries-for-individuals-pensioners-and-employees

Has she set up a personal tax account? https://www.gov.uk/personal-tax-account

And obtained a state pension forecast to help with future planning?

https://www.gov.uk/check-state-pension

Yes Xylo - we talk more on the PARP forum so up to speed on most of it

badmemory

The best way to split the personal allowance is with the bulk to go against the pension, leaving just a small amount taxable.  The logic - the pension is there forever whilst the earned income may for one reason or another stop at any time, meaning if it does stop it will leave less of a financial hole than if all the pension was taxed.  Yes it would be sorted out by HMRC eventually but better if it is less for them to sort.

chrisbur

xylophone said:

https://www.moneyadviceservice.org.uk/en/articles/pay-and-tax-when-working-in-more-than-one-job#:~:text=This%20is%20called%20the%20Personal,can%20split%20your%20Personal%20Allowance.

Richard has two jobs, his main job pays £10,000 a year and his second £9,000.

Both of these are below the Personal Allowance, so he can split his allowance between the two jobs.

He can contact HMRC and get them to transfer £2,500 of unused allowance from his main job to his second job, or he can wait until the end of the tax year and ask HMRC for a refund.

You should only ask for your Personal Allowance to be split if your income from each job is predictable and stable. If it’s not and one job ends up paying you more than expected, you will have underpaid tax.

The last para in the above example seems a bit misleading, especially the last line.
You will only end up owing tax if the combined taxable income from both jobs takes you into the next tax band, so from what we know of "Richard" he can earn another £31,000 before he has this problem.  Certainly not a case of " If  ....  one job ends up paying you more than expected, you will have underpaid tax."