Tax-free savings allowance - have HMRC got this wrong?

mark1956

In 22/23 my mother had £10.8k pension income and £6.6k taxable interest. HMRC say she owes tax on £83 interest. I think this is wrong. before I go through the HMRC phone pain, can you confirm the following tax-free savings limit calculation:
Unused personal allowance £1770
+ Starting rate for savings £5000
+ Personal savings allowance £1000
Total £7,770, therefore no unpaid tax.
Thanks

Middle_of_the_Road

Is this related to..
Marriage Allowance lets you transfer £1,260 of your Personal Allowance to your husband, wife or civil partner.

Dazed_and_C0nfused

mark1956 said:

In 22/23 my mother had £10.8k pension income and £6.6k taxable interest. HMRC say she owes tax on £83 interest. I think this is wrong. before I go through the HMRC phone pain, can you confirm the following tax-free savings limit calculation:
Unused personal allowance £1770
+ Starting rate for savings £5000
+ Personal savings allowance £1000
Total £7,770, therefore no unpaid tax.
Thanks

What Personal Allowance is she entitled to, £12,570 or £11,310?

Using your figures tax would be payable on £90 of interest if she had applied for Marriage Allowance.  Very similar to the £83.  Have you used rounded figures?

Does the calculation (P800 or PA302?) make any reference to Gift Aid?

xylophone

£10.8k pension income and £6.6k taxable interest.

Is the pension income derived from both state pension and non state pension?

She has no other taxable income?

Assuming that she has the full Personal Allowance and the tax is being taken from a non state pension, have a look at this

https://forums.moneysavingexpert.com/discussion/comment/79585658/#Comment_79585658

Is something similar happening to your mother?

And incidentally, the person mentioned in the above link found herself in exactly the same position at the start of the current tax year (paying tax on occupational pension) - she waited until she had received her occupational pension increase for the year and then rang HMRC to give the figures for pension income  23/24 (under PA by several hundred pounds) and estimated  taxable savings interest (under £2000).

The code on her occupational pension was adjusted and a tax refund received with the next pension payment - she will pay no tax in the current financial year.

Dazed_and_C0nfused

The op mentioned 22/23 so I suspect the mother has received a tax calculation rather than a tax code.

Beddie

It's a tiny amount of tax, I wouldn't go through the hassle of chasing this myself.

mark1956

Thanks for your responses everyone.
She has the full £12570 personal allowance
The pension was £7978 state and £2778 annuities. No other income apart from interest
£83 untaxed interest has appeared on her tax code notice; she hasn't had a tax calculation and I can't find this calculation on her personal tax account
Yes it's a small amount for 22/23 but her interest will be far higher is 23/24 so I want to get it right now.
Thanks again

Dazed_and_C0nfused

mark1956 said:

Thanks for your responses everyone.
She has the full £12570 personal allowance
The pension was £7978 state and £2778 annuities. No other income apart from interest
£83 untaxed interest has appeared on her tax code notice; she hasn't had a tax calculation and I can't find this calculation on her personal tax account
Yes it's a small amount for 22/23 but her interest will be far higher is 23/24 so I want to get it right now.
Thanks again

You started by saying she owed tax on £83 in 22-23 (having had interest of £6.6k)

If she hasn't had a calculation how did you know she owed tax on £83 🤔

You are presumably now referring to a 23-24 tax code notice and £83 again.

It's very difficult for anyone to provide any meaningful help without some clearer explanation of what has happened and what you actually think the real problem is?

xylophone

It's very difficult for anyone to provide any meaningful help without some clearer explanation of what has happened and what you actually think the real problem is?

The real problem is that the OP thinks that HMRC are not applying her mother's tax allowance/ bands correctly and in consequence  either tax may be deducted from her annuities or she may be sent a bill for underpaid tax?

Have you read  my post above and the linked post?

It appears from the experiences described that no confidence can be placed in HMRC's using the correct amount of savings income for the particular year or in their  applying the starter rate for savings/personal savings allowance? 

mark1956

Sorry, I realise I have misunderstood the tax code for 23/24. The £83 is HMRC's estimate of taxable interest for 23/24, not actual taxable interest carried over from 22/23. The personal tax account doesn't make this clear, its just quoted as 'untaxed interest'. I'm sorry for wasting your time, and thanks for your help