Tax code change for no reason....

sgx2000

Hi 

I currently earn £35K
I also have a local government pension paying £6600

My monthly net pension normally  £434 has suddenly reduced to £333
I have checked my pension payslip online and noticed that my tax code has changed from BR to D0

I will check at my workplace tomorrow to see if my tax code has also changed there
I will also phone MPF to check with them

Anyone any idea why this has happened and what I can do about it???

[Deleted User]

A tax code that includes 'D0' means you do not receive any personal allowance with this employment. Instead, you pay tax at the higher rate of 40% on all of your gross income.

Dazed_and_C0nfused

It sounds like HMRC have for some reason estimated your earnings at your job as being £50,270 or more which in turn means any additional PAYE income, such as the pension, usually needs to be taxed at 40%.

You should be able to check this on your Personal Tax Account and update your estimated earnings (and pension) which should in turn ensure new tax codes are calculated.

Your employer and pension payer can't change anything, they will just react to a new tax code.

If your code (for the pension) is revised back to BR on a cumulative basis then you will effectively get the extra tax deducted back the first time the pension company uses the new tax code.  Then the month after things will return to normal.

sgx2000

Dazed_and_C0nfused said:

It sounds like HMRC have for some reason estimated your earnings at your job as being £50,270 or more which in turn means any additional PAYE income, such as the pension, usually needs to be taxed at 40%.

You should be able to check this on your Personal Tax Account and update your estimated earnings (and pension) which should in turn ensure new tax codes are calculated.

Your employer and pension payer can't change anything, they will just react to a new tax code.

If your code (for the pension) is revised back to BR on a cumulative basis then you will effectively get the extra tax deducted back the first time the pension company uses the new tax code.  Then the month after things will return to normal.

Thanks for the reply..
I am 62 and never yet had to speak to HMRC...
I have always worked for companies who calculate PAYE.

"Check this on your personal tax accout"  ???  Where ? How?

Am I best contacting HMRC be phone or email?

Any comments would be very gratefully received...

Dazed_and_C0nfused

You can check your Personal Tax Account on gov.uk.

https://www.gov.uk/personal-tax-account

It should show how much HMRC have estimated your pension and taxable earnings to be.  I think it's the taxable earnings that are likely to be the crux of the issue.

I have always worked for companies who calculate PAYE

But still ultimately your responsibility to check things are correct.

NB.  I'm assuming this is extra tax in 2022:23.  If it was at the end of 2021:22 then HMRC will automatically refund any overpaid tax later this summer, you won't get that back via your pension payment.

https://www.gov.uk/tax-overpayments-and-underpayments

sgx2000

I have just checked HMRC
They have my income as 54k  (PERHAPS MY EMPLOYER HAS GIVEN ME A MASSIVE PAY RISE)  LOL.....
My pay last year was 36k

Will they have recieved this estimate from my employer?
If so can my companies parolle dept rectify this with HMRC?

Dazed_and_C0nfused

sgx2000 said:

I have just checked HMRC
They have my income as 54k  (PERHAPS MY EMPLOYER HAS GIVEN ME A MASSIVE PAY RISE)  LOL.....
My pay last year was 36k

Will they have recieved this estimate from my employer?
If so can my companies parolle dept rectify this with HMRC?

Not really no, you can just update it yourself now.  You need to estimate what your P60 (from the job) will show a year from now.

If that's say £36k then you should find a new tax code for the pension is calculated (BR replacing D0).  It probably won't affect the tax code for the job.

sgx2000

Thank you Dazed and confused.....

Please excuse my complete ignorance... as I said I have never had to do this before...

I can see how to change it now, but am not sure I should....

Do large companies payrolle dept give HMRC its employees expected earning each year??
I have never had to estimate my whole years pay before....
What happens when I over or under estimate.... potential large tax bill or rebate...

I cant ever having a tax bill or rebate

[Deleted User]

sgx2000 said:

Thank you Dazed and confused.....

Please excuse my complete ignorance... as I said I have never had to do this before...

I can see how to change it now, but am not sure I should....

Do large companies payrolle dept give HMRC its employees expected earning each year??
I have never had to estimate my whole years pay before....
What happens when I over or under estimate.... potential large tax bill or rebate...

All employers have to submit payroll data each time an employee is paid. Where HMRC derives some of its estimates should not be presumed to be based on any logic. Change it - your estimate is clearly more accurate!  

You can further amend it at any time.