Tax Code Change to 0T

WorriedTax

After working solidly all my life I am in a situation where I am now in the region of £110,000 and I know I am one of the lucky ones but my wife is now not earning enough to pay tax as she is not only supporting the kids also both our parents are coming of an age where they now need caring for. This now means my wage is covering both our salaries which if we were both on £50,000 and £60,000 respectfully we would get free pay allowance for both wages. Now I have been told after doing SA for the last 3 years that I have no free pay allowance which means I will be nearly £500 down every month. I possibly get an opportunity of a annual bonus which is how I have been able to pay my SA tax bill nearer the end of the year but loosing this amount a month is devastating. Does anyone know if I can advise the Tax office I would rather pay the bill at the end of a year if I do get a bonus or am I stuck in this real predicament? It seems when I speak to the advisor they are slightly removed and do not want to get involved. Any help would be really appreciated.

[Deleted User]

On £110000 you would lose £5000 of your personal allowance, certainly not close to all of it. That certainly does not equate to additional tax of £500 per month. Do you pay into a pension?

The other thing that you have not considered on separate salaries of £50000 and £60000 is the huge difference in National Insurance liability - a lot more charged at the higher rate. 

mybestattempt

Your employer must operate PAYE and deduct tax in accordance with the tax code HMRC send to them.

However unfair it may feel, it's not possible to ask HMRC to  deliberately issue an incorrect code to reduce PAYE deductions and accept you will catch up on tax underpaid later, when you want to pay.

chrisbur

WorriedTax said:

".... I possibly get an opportunity of a annual bonus...."

"....I would rather pay the bill at the end of a year if I do get a bonus...."

If you do not get the bonus how do you propose to pay the tax bill?

eskbanker

WorriedTax said:

Now I have been told after doing SA for the last 3 years that I have no free pay allowance which means I will be nearly £500 down every month.

Do you mean that you've submitted SA in each of the last three years, or done it recently for multiple years as a one-off catch-up exercise?  How much tax have you been told you owe, and for which years?

WorriedTax

The comment on the bonus is that Tax Office have advised that the 0T code is because of the predicted Gross Annual with the Bonus. If I do not get the bonus I would not have a potential 0T code as wage is £110,000 and this is the issue as if I do get the bonus I can pay the additional tax which is what I have done for the last 3 years. I am not trying to get away from paying what I owe but my salary is under the limit but my bonus could possibly take it over. Sorry may not be explaining this well....

eskbanker

So are you saying there's a discernible pattern of earning £125K+ per tax year, even though 'only' £110K is actually guaranteed base salary?  What's shown in your online tax account as the basis of the PAYE coding derivation?

Dazed_and_C0nfused

WorriedTax said:

The comment on the bonus is that Tax Office have advised that the 0T code is because of the predicted Gross Annual with the Bonus. If I do not get the bonus I would not have a potential 0T code as wage is £110,000 and this is the issue as if I do get the bonus I can pay the additional tax which is what I have done for the last 3 years. I am not trying to get away from paying what I owe but my salary is under the limit but my bonus could possibly take it over. Sorry may not be explaining this well....

You are overcomplicating this and asking HMRC phone staff isn't going to get you anywhere.

You should ensure that your estimated earnings are as accurate as possible.

So if you expect to earn £110k (in taxable pay) and there may or may not be a bonus to add to that then no one is going to question you using £110k as your estimated earnings.

If you get the bonus part way through the year and HMRC happen to subsequently review your tax code then they will use that new information.  But in the meantime you are the person who can best estimate your expected earnings.  All HMRC do is go on past history, they don't have a crystal ball.