Tax code reduced but no notice given from HMRC

Toptek

I'm in receipt of my occupational pension and don't work. This morning I received notification from the pension provider that my tax code is dropping by £90, this has no affect on my pension as it is still below that of the new allowance but probably will do in April's increase, albeit not much.
Does it seem right that I haven't been informed why?
All I've done is open an ISA, this year and last plus moved savings to a better place for interest but less than the tax-free savings and the starting savings rate limit. 

Hoenir

Have you opened a Personal Tax Account?  Makes life far more straightforward. 

https://www.gov.uk/personal-tax-account

Toptek

Thanks, I think I have but will check it tomorrow. However, shouldn't I have been notified prior to the pension provider letter? 

eskbanker

Tax codes are only used to drive PAYE deductions, based on advance estimates of income, so if your only non-savings income is below the allowance implied by the reduced code then you won't actually pay any more tax, i.e. this doesn't really matter.

Dazed_and_C0nfused

Toptek said:

I'm in receipt of my occupational pension and don't work. This morning I received notification from the pension provider that my tax code is dropping by £90, this has no affect on my pension as it is still below that of the new allowance but probably will do in April's increase, albeit not much.
Does it seem right that I haven't been informed why?
All I've done is open an ISA, this year and last plus moved savings to a better place for interest but less than the tax-free savings and the starting savings rate limit. 

HMRC no longer routinely issue new tax codes when there is no tax due so that is highly likely to be the reason why you didn't get details of the updated code.

https://www.gov.uk/government/publications/legislative-change-to-income-tax-paye-regulations-employee-notices-of-tax-coding

Hoenir

Toptek said:

Thanks, I think I have but will check it tomorrow. However, shouldn't I have been notified prior to the pension provider letter? 

Perhaps a way of reducing waste where there's now a means of viewing all the detail comprehensively online. 

Toptek

eskbanker said:

Tax codes are only used to drive PAYE deductions, based on advance estimates of income, so if your only non-savings income is below the allowance implied by the reduced code then you won't actually pay any more tax, i.e. this doesn't really matter.

Thanks, but I will when April's CPI increase is applied. I don't know why it's changed. 

eskbanker

Toptek said:

eskbanker said:

Tax codes are only used to drive PAYE deductions, based on advance estimates of income, so if your only non-savings income is below the allowance implied by the reduced code then you won't actually pay any more tax, i.e. this doesn't really matter.

Thanks, but I will when April's CPI increase is applied. I don't know why it's changed. 

Does the advised coding change apply to 2023/24 or 2024/25?

In terms of why it's changed, it'll probably come down to the counterintuitive way in which HMRC treats savings interest income, but your tax account should show the basis of what's been adjusted.

If you think the code you're allocated for 2024/25 would result in too much tax being deducted (and don't wish to wait for this to be corrected afterwards) then you can update your income projections in your tax account....

Toptek

The change is from next month, it's an update from the pension provider, the letter states to contact HMRC for an explanation. I will have a look at the tax portal tomorrow.
Thanks for the replies. 

Dazed_and_C0nfused

Toptek said:

eskbanker said:

Tax codes are only used to drive PAYE deductions, based on advance estimates of income, so if your only non-savings income is below the allowance implied by the reduced code then you won't actually pay any more tax, i.e. this doesn't really matter.

Thanks, but I will when April's CPI increase is applied. I don't know why it's changed. 

If HMRC's tax code calculation for 2024-25 means they think you will be liable to tax and the code for 2024-25 is different to that for 2023-24 then I would expect you to be sent details of the new code next year, in January or February ready for the new tax year.

eskbanker

Sounds like it's a coding change for 2023/24 then - you'll be issued another code for 2024/25, although the same adjustment could be made for that if they anticipate you earning the same interest income....