Change of tax code

emmail75

This is a long one so maybe get a cup of tea and a biscuit...

I lost my husband in 2016 and as our son was only 10 at the time, I was offered Widowed Parents Allowance. My tax code changed as the DWP passed my info over to HMRC. WPA is a taxable benefit. 
My son has now hit the ripe old age of 18 so the WPA stopped in September. I have no issue with this. The benefit was a life saver. 
As my tax code reflected the WPA, I called HMRC to ask them to change my tax code to the appropriate one (1257L I believe. I was on 1147L. COdes may not be spot on but it was something like that!)
They asked me a few questions, like my current income and how much WPA I was getting per month. (£560 ish) He then told me my new tax code would be 634LX as the DWP had told them I was getting around £1000 a year! He advised me to speak to the DWP who will send them the correct information.
I spoke to the DWP and they said "we sent the right info but we'll send it over again so they can make an adjustment"
I called HMRC yesterday and asked how it was going as I'd like it sorted before my next payday. HMRC have told me that the code is correct as I have underpaid by £270. I advised them (politely) that how the hell was I to know that this was wrong? As far as I'm aware, everything was fine. 
He said the best he could do would be to defer the repayment and change my tax code to 947LX. 
Will my tax code ever be 1257L? If I pay the £270 can I have a regular tax code? Do I have the right of appeal as none of this was my fault and it appears to be a !!!!!! up between the DWP and HMRC?

Dazed_and_C0nfused

Will my tax code ever be 1257L?

Quite possibly but not in a tax year when you have had income like WPA.

Why do you think your code should be 1257L given you said this in your post 🤔

My son has now hit the ripe old age of 18 so the WPA stopped in September

emmail75

Hi Dazed

I know precisely nothing about how tax codes work but I assumed as I don't get WPA anymore my tax code should be the standard tax code mas I now only have one income.

Dazed_and_C0nfused

emmail75 said:

Hi Dazed

I know precisely nothing about how tax codes work but I assumed as I don't get WPA anymore my tax code should be the standard tax code mas I now only have one income.

If your tax code for the current tax year was the normal 1257L then how would you be paying the tax on the WPA received from April to September?

sheramber

The amount of WPA your received from April to September  still needs to be included in working out your code number. so you cannpt have full personal allowances this year.

You may also have underpaid tax in the previous years  if HMRC have only included £1000  per year  in your code number when you actually received  over £6000  per year.

Exodi

Your tax code won't be 1257L this year because you received taxable benefits in the tax year which will reduce it.

Likewise if HMRC has a tax code not representative of your actual income (regardless of whose fault it is), then the underpaid tax will also be recovered by lowering your tax code, potentially this year and also into future years if they cannot fully recover the underpayment.

Your tax code will be 1257L in a tax year where you receive no taxable benefits and don't owe tax from previous years.

Unfortunately regarding the latter points about not paying the tax because it wasn't your fault, we are all responsible for ensuring our tax affairs are in order. It's no different to if an employer misdeclares a benefit to HMRC on your behalf, people don't get to not pay the tax because they didn't know or notice they'd been underpaying.

You say you (politely) asked how the hell you was supposed to know but tax codes and details can all be viewed online in your personal tax account should you ever want to look, if you ever disagree with a figure, you're able to change it. I regularly update my estimated annual income and check the figures provided for various benefits in kind.

Unfortunately you've been paying less tax than you should have been, whether it's your fault or not.