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TERRIBLE TIME WITH HMRC. DOUBLED MY INTEREST ON SAVINGS
Comments
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Non-cumulative codes are sometimes also called "month 1" or "week 1" codes because the effect is the same as if the payment was made during period 1 (April). This means any sort of lump sum or bonus is almost inevitably going to be overtaxed with a non-cumulative code. But it can happen with cumulative codes too - there was a post on here a couple of weeks ago, where someone received a bonus in April, and due to the way that PAYE works, they overpaid tax, and the correction of that overpayment via PAYE was going to happen bit by bit every month until November! And of course there are many similar threads arising from pension lump sums.
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Dazed_and_C0nfused said:HansOndabush said:We also have HMRC issues over untaxed interest. As I understand it everyone has a £1,000 tax-free allowance against untaxed interest. Why then do HMRC keep deducting 'untaxed interest' of a few hundred pounds from my wife's tax code notification meaning she doesn't get her full personal allowance even though she has never been anywhere near earning £1,000 of interest in any tax year? This seems to happen every tax year and takes a lot of faff to sort out.We have raised this with HMRC and was supposed to have a reply within 3 weeks but that deadline came and went about a fortnight ago and there seems to be no progress on it.
I suspect you are concerning yourself about something which is actually correct and has no impact on your wife.
If her earnings/pension income is less than her Personal Allowance then the rest of her unused Personal Allowance will be used up by the interest, hence the tax code deduction. Perfectly normal and correct in most instances.
She can only make use of the £1,000 savings nil rate band (aka Personal Savings Allowance) if her total taxable income exceeds a minimum of £16,310 (often £17,570).
What is her tax code and how much do you expect her to get paid in the current tax year by the employer/pension company who are using the tax code? The taxable pay figure which will be shown on her P60.No, no she is taking an amount from her SIPP to make maximum use of her tax-free personal allowance and should pay no tax. But because, in her notice of coding, HMRC are deducting several hundred pounds of 'untaxed interest', she ends up being charged tax where none should be payable. The interest should not be taxable as it is well within the £1000 allowance and should not be reducing her personal tax allowance meaning she is paying tax.I do not at all see why you say "the rest of her unused Personal Allowance will be used up by the interest, hence the tax code deduction. Perfectly normal and correct in most instances."Why is that normal at all? She should be paying no tax and I dont see why her personal allowance is being affected by untaxed interest which should not be taxed anyway?
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HansOndabush said:Dazed_and_C0nfused said:HansOndabush said:We also have HMRC issues over untaxed interest. As I understand it everyone has a £1,000 tax-free allowance against untaxed interest. Why then do HMRC keep deducting 'untaxed interest' of a few hundred pounds from my wife's tax code notification meaning she doesn't get her full personal allowance even though she has never been anywhere near earning £1,000 of interest in any tax year? This seems to happen every tax year and takes a lot of faff to sort out.We have raised this with HMRC and was supposed to have a reply within 3 weeks but that deadline came and went about a fortnight ago and there seems to be no progress on it.
I suspect you are concerning yourself about something which is actually correct and has no impact on your wife.
If her earnings/pension income is less than her Personal Allowance then the rest of her unused Personal Allowance will be used up by the interest, hence the tax code deduction. Perfectly normal and correct in most instances.
She can only make use of the £1,000 savings nil rate band (aka Personal Savings Allowance) if her total taxable income exceeds a minimum of £16,310 (often £17,570).
What is her tax code and how much do you expect her to get paid in the current tax year by the employer/pension company who are using the tax code? The taxable pay figure which will be shown on her P60.No, no she is taking an amount from her SIPP to make maximum use of her tax-free personal allowance and should pay no tax. But because, in her notice of coding, HMRC are deducting several hundred pounds of 'untaxed interest', she ends up being charged tax where none should be payable. The interest should not be taxable as it is well within the £1000 allowance and should not be reducing her personal tax allowance meaning she is paying tax.I do not at all see why you say "the rest of her unused Personal Allowance will be used up by the interest, hence the tax code deduction. Perfectly normal and correct in most instances."Why is that normal at all? She should be paying no tax and I dont see why her personal allowance is being affected by untaxed interest which should not be taxed anyway?It's normal, but obviously not correct. Technically, if your total income is within the personal allowance then the interest will be covered by the personal allowance not the PSA or savings nil rate band. But so what - the point of a tax code is to deduct the correct amount of tax, not to reflect how much personal allowance is available. For instance HMRC will increase your tax code if you get a marriage allowance transfer, your PA hasn't increased. HMRC will increase your tax code if you pay higher rate tax and contribute to a SIPP. Your PA hasn't increased. The tax code is adjusted to collect the correct amount of tax, it does not reflect how much PA you have available.So it is obviously utterly pointless to deduct untaxed interest from the tax code of people expected to earn below the PA. It achieves absolutely nothing and can cause hundreds to be incorrectly deducted as in my previous thread.1 -
HansOndabush said:Dazed_and_C0nfused said:HansOndabush said:We also have HMRC issues over untaxed interest. As I understand it everyone has a £1,000 tax-free allowance against untaxed interest. Why then do HMRC keep deducting 'untaxed interest' of a few hundred pounds from my wife's tax code notification meaning she doesn't get her full personal allowance even though she has never been anywhere near earning £1,000 of interest in any tax year? This seems to happen every tax year and takes a lot of faff to sort out.We have raised this with HMRC and was supposed to have a reply within 3 weeks but that deadline came and went about a fortnight ago and there seems to be no progress on it.
I suspect you are concerning yourself about something which is actually correct and has no impact on your wife.
If her earnings/pension income is less than her Personal Allowance then the rest of her unused Personal Allowance will be used up by the interest, hence the tax code deduction. Perfectly normal and correct in most instances.
She can only make use of the £1,000 savings nil rate band (aka Personal Savings Allowance) if her total taxable income exceeds a minimum of £16,310 (often £17,570).
What is her tax code and how much do you expect her to get paid in the current tax year by the employer/pension company who are using the tax code? The taxable pay figure which will be shown on her P60.No, no she is taking an amount from her SIPP to make maximum use of her tax-free personal allowance and should pay no tax. But because, in her notice of coding, HMRC are deducting several hundred pounds of 'untaxed interest', she ends up being charged tax where none should be payable. The interest should not be taxable as it is well within the £1000 allowance and should not be reducing her personal tax allowance meaning she is paying tax.I do not at all see why you say "the rest of her unused Personal Allowance will be used up by the interest, hence the tax code deduction. Perfectly normal and correct in most instances."Why is that normal at all? She should be paying no tax and I dont see why her personal allowance is being affected by untaxed interest which should not be taxed anyway?
Unfortunately with modern pensions where people can take money as and when they want it is tricky for HMRC to accurately estimate her future pension income.
If they think it will be £12,570 then no coding deduction (for interest) would be required.
And I'm still not convinced she is actually in a position to be able to utilise the savings nil rate band (aka Personal Savings Allowance). I think it is much more likely that her interest will be taxed under the savings starter rate band (also 0%).0 -
andy_poulton said:I just felt 3 hours today and 4 hours the other day writing to the HMRC was such an effort and waste of time.2
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Dazed_and_C0nfused said:HansOndabush said:Dazed_and_C0nfused said:HansOndabush said:We also have HMRC issues over untaxed interest. As I understand it everyone has a £1,000 tax-free allowance against untaxed interest. Why then do HMRC keep deducting 'untaxed interest' of a few hundred pounds from my wife's tax code notification meaning she doesn't get her full personal allowance even though she has never been anywhere near earning £1,000 of interest in any tax year? This seems to happen every tax year and takes a lot of faff to sort out.We have raised this with HMRC and was supposed to have a reply within 3 weeks but that deadline came and went about a fortnight ago and there seems to be no progress on it.
I suspect you are concerning yourself about something which is actually correct and has no impact on your wife.
If her earnings/pension income is less than her Personal Allowance then the rest of her unused Personal Allowance will be used up by the interest, hence the tax code deduction. Perfectly normal and correct in most instances.
She can only make use of the £1,000 savings nil rate band (aka Personal Savings Allowance) if her total taxable income exceeds a minimum of £16,310 (often £17,570).
What is her tax code and how much do you expect her to get paid in the current tax year by the employer/pension company who are using the tax code? The taxable pay figure which will be shown on her P60.No, no she is taking an amount from her SIPP to make maximum use of her tax-free personal allowance and should pay no tax. But because, in her notice of coding, HMRC are deducting several hundred pounds of 'untaxed interest', she ends up being charged tax where none should be payable. The interest should not be taxable as it is well within the £1000 allowance and should not be reducing her personal tax allowance meaning she is paying tax.I do not at all see why you say "the rest of her unused Personal Allowance will be used up by the interest, hence the tax code deduction. Perfectly normal and correct in most instances."Why is that normal at all? She should be paying no tax and I dont see why her personal allowance is being affected by untaxed interest which should not be taxed anyway?
Unfortunately with modern pensions where people can take money as and when they want it is tricky for HMRC to accurately estimate her future pension income.
If they think it will be £12,570 then no coding deduction (for interest) would be required.
And I'm still not convinced she is actually in a position to be able to utilise the savings nil rate band (aka Personal Savings Allowance). I think it is much more likely that her interest will be taxed under the savings starter rate band (also 0%).
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Thrugelmir said:andy_poulton said:I just felt 3 hours today and 4 hours the other day writing to the HMRC was such an effort and waste of time.Mind you, I do my annual SA, so there’s an annual reconciliation between the expected and the actual taxable income (which flactuates as my savings interest and some other income flactuate). HMRC might take a different view for people not doing SA.0
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Thrugelmir said:andy_poulton said:I just felt 3 hours today and 4 hours the other day writing to the HMRC was such an effort and waste of time.
If it has been updated, do you have a link or set of links to follow in the HMRC PTA online?0 -
RG2015 said:Thrugelmir said:andy_poulton said:I just felt 3 hours today and 4 hours the other day writing to the HMRC was such an effort and waste of time.
If it has been updated, do you have a link or set of links to follow in the HMRC PTA online?2 -
They got my interest wrong, they essentially added the figure I provided on SA to the figure the banks gave them (so the amount was essentially doubled), and then continued the fiasco by assuming this was the figure to use for subsequent years.
When I finally got them on the phone they accepted the figures I gave them with out questioning them, and changed the amounts going back several years there and then...0
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