TAX code incorrect, what do we do next ?

traceyaj

First of all, sorry for starting a new thread but got into a mess with the an old thread.  
Problem is due to husband taking part payment as a small pot sum from HL SIPP. 
Requested £10K , received £8.5K  from HL who deducted tax. 
We now have a letter from HMRC stating that tax code has been amended to tax free amount £1881 for this financial year. The code was previously allowed a tax free amount of £13900. He receives a local govt . pension and earnings from part time work of 18.5 hours per week. Any help appreciated.

MikeJXE

Is there typos there ? tax free amount of £13900  is greater than the current personal tax free amount of £12,570 

QrizB

Previous thread here:

https://forums.moneysavingexpert.com/discussion/6395756/cashing-in-a-sipp

traceyaj said:

Requested £10K , received £8.5K  from HL who deducted tax.

That sounds about right in the context of your previous thread; £2500 tax-free then £7500 taxed at 20% (so £1500 tax) for a total of £8500.

eskbanker

When there are multiple companies paying OP's husband (two pension companies plus employer), there will need to be one tax code per company, so it'll probably be useful to outline what the various notified codes are, together with anticipated taxable income for the year from each.

p00hsticks

traceyaj said:

First of all, sorry for starting a new thread but got into a mess with the an old thread.  
Problem is due to husband taking part payment as a small pot sum from HL SIPP. 
Requested £10K , received £8.5K  from HL who deducted tax. 
We now have a letter from HMRC stating that tax code has been amended to tax free amount £1881 for this financial year. The code was previously allowed a tax free amount of £13900. He receives a local govt . pension and earnings from part time work of 18.5 hours per week. Any help appreciated.

One possibility is that now he has taken something from his SIPP HMRC have split his tax allowance across his SIPP, his local government pension and his employer, resulting in three separate codes being issued which between them will give his full allowance. Are you sure that he doesn't tax codes other than the one referred to in the letter ?

molerat

It looks like they were using BR so correctly deducted 20% tax. 

What is his total income for the year from the CS pension and part time job ? 

Does his on line tax account reflect those correctly ?

What tax codes have they now allocated to both the CS pension and the part time job ? 

What reason have they given for reducing the code(s) ?

molerat

MikeJXE said:

Is there typos there ? tax free amount of £13900  is greater than the current personal tax free amount of £12,570 

PA + 10% marriage allowance + laundry / prof subs etc could easily reach £13900

Dazed_and_C0nfused

traceyaj said:

First of all, sorry for starting a new thread but got into a mess with the an old thread.  
Problem is due to husband taking part payment as a small pot sum from HL SIPP. 
Requested £10K , received £8.5K  from HL who deducted tax. 
We now have a letter from HMRC stating that tax code has been amended to tax free amount £1881 for this financial year. The code was previously allowed a tax free amount of £13900. He receives a local govt . pension and earnings from part time work of 18.5 hours per week. Any help appreciated.

He wouldn't have a "tax code", he'd have multiple tax codes.

One for the local govt pension, one for the part time earnings and one for the HL SIPP.

Perhaps you could clarify what the tax code allocated to each of these sources of income is.

And how much he expects to receive in taxable income during the current tax year from each one.

Was the £10k taken from HL all taxable or was the taxable amount (pre tax) different?

Dazed_and_C0nfused

MikeJXE said:

Is there typos there ? tax free amount of £13900  is greater than the current personal tax free amount of £12,570 

The most common tax code involving receipt of Marriage Allowance is likely to be 1383M so tax code allowances of £13,900 wouldn't be too unusual.

traceyaj

MikeJXE said:

Is there typos there ? tax free amount of £13900  is greater than the current personal tax free amount of £12,570 

Mike , He has 10% of my allowance and clothing expense. 

traceyaj

Thanks for the replies. 
The codes are broken down as follows:- from local govt. pension £1266 is tax free, current employment £615 tax free, HL £0 income tax free,  codes are pension fund £126M X, employment 61T, HL BR. His gross monthly pension is approx. £1140 per month, employment is £898 per month, no other income, savings mostly in ISAs.