Savings allce

Silverbird65

I hope you get things sorted I am exhausted trying to sort this out and make them understand. Thanks

molerat

Linwhite said:

HMRC are doing exactly the same to my husband and myself, we have both taken early retirement and our company pensions are well below the tax threshold so haven't paid any tax for a few years. Our savings interest 2021-22 was around £450 each so well below the £1,000 allowable but this amount has been deducted from our personal allowance for last year and this year reducing our tax codes to 1213L. It doesn't affect me as I don't get the state pension for another 5 years but my husband is due to start getting the state pension from December this year so is going to pay more tax than he should. I've spoken to HMRC and sent a letter with the breakdown of all the savings interest but they still haven't altered the tax codes online so I'll have to try ringing again in a few weeks. I just wonder how many other people are on the wrong tax code due to the same error.

The wrong tax code is only relevant if you are paying tax, if you are not paying tax it does not matter what the tax code is as it is only a way of attempting to collect the correct amount of tax.  If you have spare allowance they will always fill the gap with interest.  When his state pension comes into payment they will remove the interest from the coding.  No point contacting them.

Dazed_and_C0nfused

Linwhite said:

HMRC are doing exactly the same to my husband and myself, we have both taken early retirement and our company pensions are well below the tax threshold so haven't paid any tax for a few years. Our savings interest 2021-22 was around £450 each so well below the £1,000 allowable but this amount has been deducted from our personal allowance for last year and this year reducing our tax codes to 1213L. It doesn't affect me as I don't get the state pension for another 5 years but my husband is due to start getting the state pension from December this year so is going to pay more tax than he should. I've spoken to HMRC and sent a letter with the breakdown of all the savings interest but they still haven't altered the tax codes online so I'll have to try ringing again in a few weeks. I just wonder how many other people are on the wrong tax code due to the same error.

@Linwhite

It's not an error though.  It might not be logical but it's not wrong.

You cannot use the savings nil rate band (aka Personal Savings Allowance) unless the Personal Allowance and any available savings nil rate band have both been used.

When his State Pension starts his tax code will be automatically reviewed and if there is no longer any spare Personal Allowance and his estimated interest is less than any available savings starter rate band and savings nil rate band then his revised tax code won't include a deduction for interest.

You're trying to change something that isn't wrong, isn't causing a problem and won't cause a problem when his State Pension starts.

Slowplod

Thanks for clarifying molerat, I'll wait and see what happens when he starts receiving the state pension.

Albermarle

Linwhite said:

Thanks for clarifying molerat, I'll wait and see what happens when he starts receiving the state pension.

Also to be clear, even if a tax code is wrong and he pays the wrong amount of tax, it will come out in the wash when his final calculation is done for that tax year.

Silverbird65

So can we change the amount back to what it was before or will that further complicate things.
Thanks 

Dazed_and_C0nfused

Silverbird65 said:

So can we change the amount back to what it was before or will that further complicate things.
Thanks 

If you've simply provided a more accurate estimate of the interest he will receive in the current tax year then I'd just leave it be.

His code will be reviewed again soon after his State Pension starts.

Silverbird65

No it was an estimate of the ear ings from employment till he retires i.e April til end June.
Thanks

molerat

Because of that savings deduction he is paying just under £10 per month more in tax than he should be.  So it is either live with that until his SP kicks in when it should be corrected or set his income from that job at the full year's wage which should set the codes to 1257 and BR on the pension and will reduce the total monthly tax take by that £10.  What incomes will he be receiving once SP kicks in ?

Silverbird65

£889.95 per week. Thanks for all your help.