Tax code bewilderment

C_Mababejive

Hi all,

first of all maths is not one of my strongest suits !

Ive recently submitted and paid due tax on my 22-23 tax assessment.

I made a contribution to a SIPP and of course put the gross figure in the relevant box on the tax return.

I've just received a notice to change my tax code for the current 23-24 year from 1257L to 2117L and it states £8294 personal pension relief ?? 

I have no clue where this come from and why is my code being changed when i fill in a SA every year once the financial year has closed off ??

Thanks all

[Deleted User]

HMRC are attempting to ensure that your tax is correct this year - no big refund which would otherwise have to wait for the submission of your return. They have assumed that you will make the same SIPP contribution this year and have adjusted your vide accordingly. 

We would need to know your salary and pension contribution (£16500 is my first guess) to advise further?

C_Mababejive

[Deleted User] said:

HMRC are attempting to ensure that your tax is correct this year - no big refund which would otherwise have to wait for the submission of your return. They have assumed that you will make the same SIPP contribution this year and have adjusted your vide accordingly. 

We would need to know your salary and pension contribution (£16500 is my first guess) to advise further?

Ah right, this is what i was thinking. 

In the tax year 23-24 i will be in the 40% bracket  and i have already made a contribution to my SIPP though the tax relief has not yet been applied.

Why are they then guesstimating what i may or may not pay in?

Why dont they just mind their business and leave my tax code as 1257L and await my 23-24 tax return?

It makes it more confusing because they do not clearly explain in laymans terms what they are doing and why..

[Deleted User]

PAYE is simply an attempt to ensure that you pay the correct tax in the year. By including an amount to gauge higher rate tax relief on your pension contributions you are receiving tax relief earlier. Without figures we can’t help you check how they were calculated.

Having said that, if you don’t like this approach simply remove the relief by accessing your personal tax account. 

As an aside your code has increased by 860 points - additional tax free amount of 8600-8609. As the entry for pension relief is 8294 there must be something additional in your code. 

BoGoF

Why would you not want the tax relief in your hand now instead of after you submit your Tax Return. As for guesstimating - tell them what the correct figure should be.

Dazed_and_C0nfused

C_Mababejive said:

[Deleted User] said:

HMRC are attempting to ensure that your tax is correct this year - no big refund which would otherwise have to wait for the submission of your return. They have assumed that you will make the same SIPP contribution this year and have adjusted your vide accordingly. 

We would need to know your salary and pension contribution (£16500 is my first guess) to advise further?

Ah right, this is what i was thinking. 

In the tax year 23-24 i will be in the 40% bracket  and i have already made a contribution to my SIPP though the tax relief has not yet been applied.

Why are they then guesstimating what i may or may not pay in?

Why dont they just mind their business and leave my tax code as 1257L and await my 23-24 tax return?

It makes it more confusing because they do not clearly explain in laymans terms what they are doing and why..

HMRC would likely ask why didn't you tick the box (or not tick it, whichever applies) near the end of the return which asks if you are happy for your current tax code to be updated using information from your tax return.

This is a different question to the one about how any tax owed for 2022-23 should be collected.

If you didn't want them to amend your tax code then that was in your hands, HMRC have simply responded to the wish you provided via your tax return.

C_Mababejive

i must have missed that ticky box !  so i should just live with it and square it up on my tax return? I guess its money up front though ill have to be mindful that i will still have some tax to pay when the return goes in.

I'm fully expecting to have to make about a 10k pension contribution in 23-24 anyway..

[Deleted User]

I would surmise that you would have been more annoyed if you had wanted any underpayment collected in this manner and HMRC had ignored you.