Pensioner Incomes being Taxed at 50% - K Code Issues

[Deleted User]

[Deleted User] said:

[Deleted User] said:

Bookworm105 said:

[Deleted User] said:

 I have seen the evidence of pensioner P2 and P60 where the allowance has gone negative causing a K code to be assigned something that causes the income to be taxed at 50%. .

then please show the TOTAL income from ALL SOURCES if you want to stick with your claim that the tax rate is 50% overall.
you seem to be misunderstanding that the state pension has had zero tax deducted from it at source yet forms part of total taxable income

The reason why the Marriage Allowance exists is that many thousands if not millions of people have an entire income that falls below the standard Personal Allowance of £12,570 per year. The upper 20% tax threshold is £37,700. Ergo, income falling between £12,750 and £37,700 is taxable at 20%.

No - income falling between 12570 and 50270 is taxable at 20%. 

Hopefully this clarifies matters for you!

Yes, what a useless trolling answer. The band you quote refers to National insurance and pensioners do not pay National Insurance.

Dazed_and_C0nfused

[Deleted User] said:

[Deleted User] said:

[Deleted User] said:

Bookworm105 said:

[Deleted User] said:

 I have seen the evidence of pensioner P2 and P60 where the allowance has gone negative causing a K code to be assigned something that causes the income to be taxed at 50%. .

then please show the TOTAL income from ALL SOURCES if you want to stick with your claim that the tax rate is 50% overall.
you seem to be misunderstanding that the state pension has had zero tax deducted from it at source yet forms part of total taxable income

The reason why the Marriage Allowance exists is that many thousands if not millions of people have an entire income that falls below the standard Personal Allowance of £12,570 per year. The upper 20% tax threshold is £37,700. Ergo, income falling between £12,750 and £37,700 is taxable at 20%.

No - income falling between 12570 and 50270 is taxable at 20%. 

Hopefully this clarifies matters for you!

Yes, what a useless trolling answer. The band you quote refers to National insurance and pensioners do not pay National Insurance.

Your problem is that it was a factually correct answer.

Excluding Scottish residents the standard basic rate band where 20% tax is payable is £37,700.

And for most people this falls in the range £12,570 to £50,270.

molerat

[Deleted User] said:

[Deleted User] said:

[Deleted User] said:

Bookworm105 said:

[Deleted User] said:

 I have seen the evidence of pensioner P2 and P60 where the allowance has gone negative causing a K code to be assigned something that causes the income to be taxed at 50%. .

then please show the TOTAL income from ALL SOURCES if you want to stick with your claim that the tax rate is 50% overall.
you seem to be misunderstanding that the state pension has had zero tax deducted from it at source yet forms part of total taxable income

The reason why the Marriage Allowance exists is that many thousands if not millions of people have an entire income that falls below the standard Personal Allowance of £12,570 per year. The upper 20% tax threshold is £37,700. Ergo, income falling between £12,750 and £37,700 is taxable at 20%.

No - income falling between 12570 and 50270 is taxable at 20%. 

Hopefully this clarifies matters for you!

Yes, what a useless trolling answer. The band you quote refers to National insurance and pensioners do not pay National Insurance.

Ferro is correct.  If you are using £12570 as the base then higher rate starts at £50270, taxable income above your personal allowance between £1 and £37700 is taxed at 20%.

You are the one that has no grasp of how the tax system works.

[Deleted User]

[Deleted User] said:

[Deleted User] said:

[Deleted User] said:

Bookworm105 said:

[Deleted User] said:

 I have seen the evidence of pensioner P2 and P60 where the allowance has gone negative causing a K code to be assigned something that causes the income to be taxed at 50%. .

then please show the TOTAL income from ALL SOURCES if you want to stick with your claim that the tax rate is 50% overall.
you seem to be misunderstanding that the state pension has had zero tax deducted from it at source yet forms part of total taxable income

The reason why the Marriage Allowance exists is that many thousands if not millions of people have an entire income that falls below the standard Personal Allowance of £12,570 per year. The upper 20% tax threshold is £37,700. Ergo, income falling between £12,750 and £37,700 is taxable at 20%.

No - income falling between 12570 and 50270 is taxable at 20%. 

Hopefully this clarifies matters for you!

Yes, what a useless trolling answer. The band you quote refers to National insurance and pensioners do not pay National Insurance.

Perhaps you should ask HMRC to amend to suit your beliefs. 

https://www.gov.uk/income-tax-rates

[Deleted User]

[Deleted User] said:

[Deleted User] said:

[Deleted User] said:

[Deleted User] said:

Bookworm105 said:

[Deleted User] said:

 I have seen the evidence of pensioner P2 and P60 where the allowance has gone negative causing a K code to be assigned something that causes the income to be taxed at 50%. .

then please show the TOTAL income from ALL SOURCES if you want to stick with your claim that the tax rate is 50% overall.
you seem to be misunderstanding that the state pension has had zero tax deducted from it at source yet forms part of total taxable income

The reason why the Marriage Allowance exists is that many thousands if not millions of people have an entire income that falls below the standard Personal Allowance of £12,570 per year. The upper 20% tax threshold is £37,700. Ergo, income falling between £12,750 and £37,700 is taxable at 20%.

No - income falling between 12570 and 50270 is taxable at 20%. 

Hopefully this clarifies matters for you!

Yes, what a useless trolling answer. The band you quote refers to National insurance and pensioners do not pay National Insurance.

Perhaps you should ask HMRC to amend to suit your beliefs. 

https://www.gov.uk/income-tax-rates

Better still the MSE Tax Calculator gives an idea of what tax would be payed for a given income.

CouldntResist

If it is self-consistent, the link in the MSE Tax Calculator gives the table below.

So is it right or wrong.....

[Deleted User]

CouldntResist said:

If it is self-consistent, the link in the MSE Tax Calculator gives the table below.

So is it right or wrong.....

It is absolutely correct - Between PA (12570) and PA PLUS £37700  (50270) - 20% rate applies. 

CouldntResist

@[Deleted User]: Well, quite - I use the HMRC rates you linked when I check my payslip tax and it always comes out about right to within a couple of pence...the transition to 40% tax always seems to be in the right place despite me not having a standard allowance 

[Deleted User]

[Deleted User] said:

[Deleted User] said:

[Deleted User] said:

[Deleted User] said:

[Deleted User] said:

Bookworm105 said:

[Deleted User] said:

 I have seen the evidence of pensioner P2 and P60 where the allowance has gone negative causing a K code to be assigned something that causes the income to be taxed at 50%. .

then please show the TOTAL income from ALL SOURCES if you want to stick with your claim that the tax rate is 50% overall.
you seem to be misunderstanding that the state pension has had zero tax deducted from it at source yet forms part of total taxable income

The reason why the Marriage Allowance exists is that many thousands if not millions of people have an entire income that falls below the standard Personal Allowance of £12,570 per year. The upper 20% tax threshold is £37,700. Ergo, income falling between £12,750 and £37,700 is taxable at 20%.

No - income falling between 12570 and 50270 is taxable at 20%. 

Hopefully this clarifies matters for you!

Yes, what a useless trolling answer. The band you quote refers to National insurance and pensioners do not pay National Insurance.

Perhaps you should ask HMRC to amend to suit your beliefs. 

https://www.gov.uk/income-tax-rates

Better still the MSE Tax Calculator gives an idea of what tax would be payed for a given income.

And, guess what, on income of 50270 you remain a basic rate taxpayer. 

sheramber

[Deleted User] said:

sheramber said:

[Deleted User] said:

molerat said:

They should also have received their P60's from their pension provider(s)

Providers have until the end of May to supply the P60

The evidential fact being seen is that some low-income pensioners are paying tax at both 50% .....

There is no 50% tax rate.  Some may be paying 50% of a particular pension in tax but that will be because it is tax due from elsewhere.

K codes are used where other untaxed income exceeds the personal allowance and should, in most cases, result in the correct amount of due tax being collected. The 50% limit may in fact result in too little tax being collected. What other method of collecting the tax due do you suggest ? I suspect there would be mass panic when a simple assessment dropped on the doormat asking for £££££ by January.

Just goes full circle back to my previous post

It is amazing how many people have a poor understanding of a) the tax system and, even worse, b) basic maths.

You have to consider that you are one of those you demeen because you are trolling with nothing of substance to contribute. I have seen the evidence of pensioner P2 and P60 where the allowance has gone negative causing a K code to be assigned something that causes the income to be taxed at 50%. K codes are usually associated with a benefit-in-kind of some sort so the pension is being treated as such by HMRC. What should happen is that the code becomes BR however if HMRC can tax at 50% rather than 20% they will.

What about the income that has not been taxed- i.e. state pension.  This income is taxable but cannot be taxed at source so thte tax has to come from elsewhere.

How do youn propose the tax due on the state penion is charged?

The reason why the Marriage Allowance exists is that many thousands if not millions of people have an entire income that falls below the standard Personal Allowance of £12,570 per year. The upper 20% tax threshold is £37,700. Ergo, income falling between £12,750 and £37,700 is taxable at 20%.

The entire income is relevant. Over the entire income the tax is charged at 20%, regardless of how much is deducted  from an individual source.

Hopefully, this clarifies it for you.