Tax code K

Cliddy09

I've looked everywhere about this but I'm still confused.

I have a tax code of K

I have the standard personal allowance around £12000
I have a small private pension around £3000
I have the state pension around £8000
I have a small income from a rental property around £3000
All together as you can see they come to over the personal allowance.
I expect to pay income tax on the amount of around £2000
So far correct ???

I would suggest that these circumstances are repeated many times around the country in various combinations.  So why is everything I read about the tax code of K deemed to be so unusual.
Doesn't everyone who earns more than the personal allowance fall into this category?
Help please.

Penguin_

A K tax code means you have a negative personal allowance.

For example if you had a tax code of 250L your personal allowance would be £2500 for the year, meaning you pay tax on all earnings above £2500.

If you have a tax code of K250, your personal allowance would be -£2500.

[Deleted User]

Hi.

from Gov.UK,

Tax codes with the letter ‘K’

The letter K is used in an employee’s tax code when deductions due for company benefits, state pension or tax owed from previous years are greater than their Personal Allowance.

Multiply the number in their tax code by 10 to show how much should be added to their taxable income before deductions are calculated.

Example An employee with tax code K475 and a salary of £27,000 has taxable income of £31,750 (£27,000 plus £4,750).

Dazed_and_C0nfused

Cliddy09 said:

I've looked everywhere about this but I'm still confused.

I have a tax code of K

I have the standard personal allowance around £12000
I have a small private pension around £3000
I have the state pension around £8000
I have a small income from a rental property around £3000
All together as you can see they come to over the personal allowance.
I expect to pay income tax on the amount of around £2000
So far correct ???

I would suggest that these circumstances are repeated many times around the country in various combinations.  So why is everything I read about the tax code of K deemed to be so unusual.
Doesn't everyone who earns more than the personal allowance fall into this category?
Help please.

It isn't really "unusual".

But if there are say 30 or 40 million people in the UK with tax codes only quite a small proportion will have a K code so maybe it would be more accurate to say they're uncommon rather than unusual 

[Deleted User]

I am struggling to see against what income the op could have a K code applied. 

Income from property of £3000 plus state pension of 8000 leaves 1570 of personal allowance available to set against the private pension.

Is there a fourth source of income (against which a BR code could be applied)?

JGB1955

[Deleted User] said:

I am struggling to see against what income the op could have a K code applied. 

Income from property of £3000 plus state pension of 8000 leaves 1570 of personal allowance available to set against the private pension.

Is there a fourth source of income (against which a BR code could be applied)?

Would unpaid tax from a previous year come into that category?

[Deleted User]

JGB1955 said:

[Deleted User] said:

I am struggling to see against what income the op could have a K code applied. 

Income from property of £3000 plus state pension of 8000 leaves 1570 of personal allowance available to set against the private pension.

Is there a fourth source of income (against which a BR code could be applied)?

Would unpaid tax from a previous year come into that category?

Of course - but we haven’t been given that information and the underpayment would have to have exceeded c£300.

Cliddy09

[Deleted User] said:

I am struggling to see against what income the op could have a K code applied. 

Income from property of £3000 plus state pension of 8000 leaves 1570 of personal allowance available to set against the private pension.

Is there a fourth source of income (against which a BR code could be applied)?

JGB1955 said:

[Deleted User] said:

I am struggling to see against what income the op could have a K code applied. 

Income from property of £3000 plus state pension of 8000 leaves 1570 of personal allowance available to set against the private pension.

Is there a fourth source of income (against which a BR code could be applied)?

Would unpaid tax from a previous year come into that category?

The figures are £8k, £3k and £3k all round figures for the purposes of my issue. 
I still see that only the approximate figure of £2k should be taxed.ie 14k minus 12k

molerat

The tax code notification will show how they have arrived at that code.

As an aside there will likely be quite a few pre 2016 pensioners on a K code.  And I suspect 2024-25 will add a whole new swathe to that number as a full post 2016 SP will likely be above the marriage tax allowance given away level.

[Deleted User]

Cliddy09 said:

[Deleted User] said:

I am struggling to see against what income the op could have a K code applied. 

Income from property of £3000 plus state pension of 8000 leaves 1570 of personal allowance available to set against the private pension.

Is there a fourth source of income (against which a BR code could be applied)?

JGB1955 said:

[Deleted User] said:

I am struggling to see against what income the op could have a K code applied. 

Income from property of £3000 plus state pension of 8000 leaves 1570 of personal allowance available to set against the private pension.

Is there a fourth source of income (against which a BR code could be applied)?

Would unpaid tax from a previous year come into that category?

The figures are £8k, £3k and £3k all round figures for the purposes of my issue. 
I still see that only the approximate figure of £2k should be taxed.ie 14k minus 12k

The personal allowance is 12570. However, the only source against which a code could be applied is the occupational pension income. Your personal allowance would be reduced by the property income and the state pension leaving approximately 1500 of personal allowances to set against the occupational pension. You would pay tax of c£300. 

 K codes are applicable to negative personal allowances. There must be some reasoning as to why you are on a K code.

As molerat says - we need a breakdown of the code.

Cliddy09

I still think I'm not getting my point across. Firstly the figures I've provided are the only ones involved and no outstanding balance to pay off.The figures are all rounded off just for convenience, as the few rounding pounds are insignificant in the circumstances.
What I don't understand is the actual definition of a k code in that it's a negative. What does that mean in tax code terms.
My other point is that it has nothing to do with pensions specifically.
A vaste number of tax payers are earning more than the personal allowance. Some only just exceeding it and many more earning significantly more.
In which case why aren't all those people also on a K code. Indeed probably many replying to me here fall into that category.

I do realise I'm missing something here, but I need it explained in words of one syllable 😃