Reason for tax code change

SiliconChip

A few days ago I logged into my personal tax account and updated my expected income from 2 pensions for the current tax year. As planned my tax codes for the pensions updated so that no tax will be taken (at least for now, they may change again when my savings income from 2023/4 is calculated, and definitely in November when I start to receive state pension). What is slightly peculiar is the reason given for the change:

your Untaxed interest on savings and investments has been reduced from £628 to £5

I haven't told them anything about savings interest, so I'm unclear why that has been given as the reason. It's not something I'd waste time asking HMRC about but I wondered if anyone here might have any idea why they've done it.

Dazed_and_C0nfused

The wording is misleading but I suspect what has happened is that prior to your update you had £628 unused tax code allowances and the interest used these.

Now you have updated your estimated pension income the allowances still available are only £5 and that is what the message is trying (not very well) to explain.

Once your State Pension starts you won't have any unused allowances and that deduction won't be appropriate.  Not for that reason anyway.

SiliconChip

Dazed_and_C0nfused said:

The wording is misleading but I suspect what has happened is that prior to your update you had £628 unused tax code allowances and the interest used these.

Now you have updated your estimated pension income the allowances still available are only £5 and that is what the message is trying (not very well) to explain.

Once your State Pension starts you won't have any unused allowances and that deduction won't be appropriate.  Not for that reason anyway.

Thanks for that @daz@Dazed_and_C0nfused, that seems to make some sense even if what HMRC have actually written doesn't. I'll be keeping a close eye on my tax account this year anyway as the rise in interest rates over the last couple of years means I earn a lot more interest than previously so I'll need to make sure that the various savings allowances are applied correctly, and State Pension will further complicate things.