Tax Code

NH2004

I’ve just received a new tax code notice for the 23/24 tax year which I’m not sure is correct and would like some advice. 

I earn above the limit for the child benefit tax so have always had my tax code adjusted to pay back what I owe for child benefit. 

For the 22/23 tax year my taxable income was £58000 and my tax code for the year 1099L. 

It was about right as after submitting the latest tax return on the 30th September, what with gift aid and professional subscriptions allowances I owed around £20 for the 22/23 tax year. 

I then received a new tax code notice in October of 1316L which seemed to have removed the child benefit charge.  I corrected this online by adding the child benefit amount as other income and shortly after I received a new code that was £1191L, which was used for my October pay. 

I still believed this to be too high and called them explaining the situation. 

After adding back the child benefit charge and removing the £1248 as other income the guy then told me my new tax code was 752L because of in year adjustment. I still felt that was wrong as I’d still been paid April to September on the 1099L tax code. 

He then checked again and gave another tax code of 1004L, which I thought was about right. 

So today I have just received a new letter with a revised tax code of 747LX on which it is accounting for the child benefit charge listed as £3120 and an adjustment of tax I owe this year of £2569. 

This seems wrong to me as although I changed my taxable income to be £60000 and therefore will have to pay back the full £1248 I receive in child benefit, that would be the only tax I owe. I don’t earn savings interest over £500 and have no other income other than the one job which is all on PAYE. 

Can anyone advise on this?
I never get my head around the tax code adjustment values but they generally work out ok each year. 

But this time it seems way off. 

Thanks for your help

molerat

On £60K you need to pay £11428 tax plus return the £1248 CB so £12676 to be deducted from your pay.

April to Sep you paid £6030 tax leaving £6646 to be collected.

At October you had paid £6820 tax leaving £5856 to be collected.

With a 747X code you will pay £1122 tax each month, £5610 over the next 5 months so £246 short for the year.

The 1004 code would put you in the same position at end of year but would have collected all the back tax in one go in November instead of spreading it over the rest of the year.

The above use £60K as your taxable income, any allowances off that (pension ?) will alter the figures.

xylophone

Is there any reason why you are not making pension contributions to reduce your ANI?

https://www.mandg.com/pru/adviser/en-gb/insights-events/insights-library/reduce-high-income-child-benefit-charge

• Identify adjusted net income.

• Subtract £50,000 from adjusted net income.

• The difference is the income giving rise to the tax charge.

• Either:

a. Reshape the tax causing income, or

b. make a personal pension (relief at source) contribution in the tax year in which the child benefit tax charge will apply.

https://www.gov.uk/child-benefit-tax-calculator

https://www.theguardian.com/society/2021/may/01/child-benefit-high-earning-parents-can-use-pensions-to-cut-charges

NH2004

Thanks for the replies. 

In that case it looks about right then. 

The £60k is after pension payments are deducted. 

There will be a few minor adjustments for Gift Aid and professional subscription allowances but it looks like it should work out fairly close and only a small payment to make after the next tax return is submitted. 

NickTheAccountant

Agree with xylophone if your claiming child benefit and earn £60k you are paying an effective rate of at least 60% (more if there is any student loans etc, I ready somewhere is was possible to pay over 100% in extreme cases) personal pension contributions rises the higher rate tax band, although if possible you’d be best asking your employees to put any income after £50k into a pension to stop the whopping 60% tax. Socially if you are anywhere near your mid forties upwards as youll be able to take advantage of the lump sum tax free at 57 (if current rules stay the same, big if!!)