Can I reverse a tax code change linked to SIPP?

aroominyork

I couple of days ago I completed my first self assessment. Today I received an email that my tax code has changed and logging into Gateway I saw it has changed from 1250L to 2018L. I assume this is because I declared SIPP contributions around c.£35,000, HMRC assumes I will make similar contributions this year and is allowing for the higher rate tax relief.

I may not make SIPP payments this year, and if I do I want the higher rate tax relief tax claimed at the end of the tax year as a lump sum - I do not want to receive a higher take home salary each month. (I was not higher rate last year, I am this year.)

Can I reverse this, and if so how? Do I have to write or phone HMRC and will they mind reversing it to 1250L?

Dazed_and_C0nfused

You can't reverse it but you can ask for a revised tax code to be calculated and sent to your employer without the relief for pension contributions.

Chances are this will put your code back to 1250L but that depends if any other changes were included and if the 2018L code has been used by your employer.

So 1250L will probably be the new tax code but its not guaranteed to be.

aroominyork

We are a very small organisation which I head, and all tax mail comes to me. Rather than contacting HMRC presumably I could just bin the notification (when it arrives in the mail) rather than put it through payroll?

kuratowski

You can call them or use online chat. Another way, which I prefer, is to send an update through your personal tax account.  Go to PAYE, current year, your tax free amount, and then click the “update or remove” link next to the personal pension payments line. This brings up a form you can use to tell HMRC how much you are expecting to contribute this year.  In the amount box, I usually quote the gross contributions, but I think the best thing is to put clear description in the comment explaining exactly what you want to change.

Dazed_and_C0nfused

You could.  But then the organisation would be failing to comply with the tax code issued by HMRC and that is potentially attracting unwanted attention.

The simplest thing to do would be to go on HMRC's webchat and ask for your code to be amended, if the new code hasn't been used yet it is likely to be 1250L again but as that is a non standard code it simply isn't possible to be certain it will be 1250L again unless you provide details of how the original and new codes were calculated and all the entries from your 2020:21 Self Assessment return.

aroominyork

And if I get my code reversed and then I do make SIPP contributions, will next year's self assessment pay the higher rate relief as a lump sum rather than adjusting my 2022-23 tax code?

Dazed_and_C0nfused

aroominyork said:

And if I get my code reversed and then I do make SIPP contributions, will next year's self assessment pay the higher rate relief as a lump sum rather than adjusting my 2022-23 tax code?

If your overall tax liability, including any higher rate relief, is a refund then yes.

HMRC never allow pension tax relief for one tax year in the tax code of a different tax year.

Marcon

aroominyork said:

I couple of days ago I completed my first self assessment. Today I received an email that my tax code has changed and logging into Gateway I saw it has changed from 1250L to 2018L. I assume this is because I declared SIPP contributions around c.£35,000, HMRC assumes I will make similar contributions this year and is allowing for the higher rate tax relief.

I may not make SIPP payments this year, and if I do I want the higher rate tax relief tax claimed at the end of the tax year as a lump sum - I do not want to receive a higher take home salary each month. (I was not higher rate last year, I am this year.)

Can I reverse this, and if so how? Do I have to write or phone HMRC and will they mind reversing it to 1250L?

Your self assessment tax return gives you space to provide bank details where any repayment of overpaid tax can be paid, usually pretty promptly after your form has been received. Maybe the simplest thing to do is submit your self assessment form a week or so before the latest date for online submission, rather than being efficient enough to do it in September - hopefully that way you'll just get a repayment in future tax years without the need for any further action on your part. 

Albermarle

kuratowski said:

You can call them or use online chat. Another way, which I prefer, is to send an update through your personal tax account.  Go to PAYE, current year, your tax free amount, and then click the “update or remove” link next to the personal pension payments line. This brings up a form you can use to tell HMRC how much you are expecting to contribute this year.  In the amount box, I usually quote the gross contributions, but I think the best thing is to put clear description in the comment explaining exactly what you want to change.

Yes I have done this via my personal tax account last year . The first time nothing actually  changed for some reason ,  but when I did it again my tax code changed a couple of weeks later .

aroominyork

kuratowski said:

Another way, which I prefer, is to send an update through your personal tax account.  Go to PAYE, current year, your tax free amount, and then click the “update or remove” link next to the personal pension payments line. This brings up a form you can use to tell HMRC how much you are expecting to contribute this year.  In the amount box, I usually quote the gross contributions, but I think the best thing is to put clear description in the comment explaining exactly what you want to change.

Albermarle said:

kuratowski said:

You can call them or use online chat. Another way, which I prefer, is to send an update through your personal tax account.  Go to PAYE, current year, your tax free amount, and then click the “update or remove” link next to the personal pension payments line. This brings up a form you can use to tell HMRC how much you are expecting to contribute this year.  In the amount box, I usually quote the gross contributions, but I think the best thing is to put clear description in the comment explaining exactly what you want to change.

Yes I have done this via my personal tax account last year . The first time nothing actually  changed for some reason ,  but when I did it again my tax code changed a couple of weeks later .

I have done this. Thanks All - much appreciated.

aroominyork

PS  While I wait for HMRC to assess my 'reverse' request, I just noticed that the site says they changed my tax code to 2018L because "you now get Personal Pension Payments worth £7,614". That seems a curious way to describe higher rate relief on payments into my SIPP. Is it a correct description, or might I have entered something wrong on my self-assessment?