24/25 new code for untaxed savings interest.

pumas

I've been given a tax code to cover estimated savings interest tax, for Jan-Mar of K1721x, meaning an allowance of -17219 but I can't work out how that affects my monthly 'pay'. 
I get the personal allowance of 12570 on pensions and 1000 for savings, leaving say 10000 taxable, before the taxable savings.

molerat

That code means you will be taxed on £1434.93 on top of all income from that source for each of those months.  What was the previous code applied and what is the monthly income from that source ?

Flugelhorn

be interested to see the answer to this OH has just had a K code that adds another 11K 

molerat

The actual effect depends on the previous code in use as you also lose that tax free amount.

pumas

Previous code K23 meaning taxed 20% on £336. I can't  work out how K23 equates to 336. Monthly income 1364.56.
How does K1721x equate to 1434?

molerat

17210 / 12.  

Previous code K23 meaning taxed 20% on £336. I can't  work out how K23 equates to 336.

It doesn't. K23 deducts tax on your whole income +£19.92 (239/12) per month so £1384 taxable at 20%.  

As your code is already K then the additional taxable is £1434 - £19 = £1415 per month.  K23 on £1364.56 deducts £276.80 tax, K1721 deducts £559.80 so an additional £283 per month, £849 total over the 3 months.

pumas

It all works out in the end, and I know exactly how much interest I'll get and the tax to pay, but I find HMRC's calculations difficult to follow.

Sorry to be a pain, but where exactly does '-17219' come in the calculation, how does it mean '1434'?

Oops 'Previous code K23 meaning taxed 20% on £336. I can't  work out how K23 equates to 336.' 
What I meant was that an extra 336 was being paid on estimate of 1680.

Dazed_and_C0nfused

pumas said:

It all works out in the end, and I know exactly how much interest I'll get and the tax to pay, but I find HMRC's calculations difficult to follow.

Sorry to be a pain, but where exactly does '-17219' come in the calculation, how does it mean '1434'?

Oops 'Previous code K23 meaning taxed 20% on £336. I can't  work out how K23 equates to 336.' 
What I meant was that an extra 336 was being paid on estimate of 1680.

-17219 is presumably your (negative) tax code allowances.

That is only ever provisional and ultimately of no relevance, it's just a mechanism so some tax can be deducted during the year.

If the employer/pension payer pays on a monthly basis then they will add £1,434 (1/12th of 17,219) to each payment purely for the purposes of calculating the tax due.  You aren't actually paid the £1,434m

And however bad a K (negative) tax code is the employer or pension payer using the code should not ever deduct more than 50% in tax from any individual payment.

SiliconChip

Dazed_and_C0nfused said:

pumas said:

It all works out in the end, and I know exactly how much interest I'll get and the tax to pay, but I find HMRC's calculations difficult to follow.

Sorry to be a pain, but where exactly does '-17219' come in the calculation, how does it mean '1434'?

Oops 'Previous code K23 meaning taxed 20% on £336. I can't  work out how K23 equates to 336.' 
What I meant was that an extra 336 was being paid on estimate of 1680.

And however bad a K (negative) tax code is the employer or pension payer using the code should not ever deduct more than 50% in tax from any individual payment.

I can confirm this, I was allocated a K code in November that was applied to one of my pensions, and it has taken exactly half of the December payment (within 1p) in tax, and I expect it to do the same for January - March.

chrisbur

SiliconChip said:

Dazed_and_C0nfused said:

pumas said:

It all works out in the end, and I know exactly how much interest I'll get and the tax to pay, but I find HMRC's calculations difficult to follow.

Sorry to be a pain, but where exactly does '-17219' come in the calculation, how does it mean '1434'?

Oops 'Previous code K23 meaning taxed 20% on £336. I can't  work out how K23 equates to 336.' 
What I meant was that an extra 336 was being paid on estimate of 1680.

And however bad a K (negative) tax code is the employer or pension payer using the code should not ever deduct more than 50% in tax from any individual payment.

I can confirm this, I was allocated a K code in November that was applied to one of my pensions, and it has taken exactly half of the December payment (within 1p) in tax, and I expect it to do the same for January - March.

That is the maximum tax that can be taken so probably more than that was owed.  Don't know if the extra will get carried forward to next year or if another pension will be used.

SiliconChip

chrisbur said:

SiliconChip said:

Dazed_and_C0nfused said:

pumas said:

It all works out in the end, and I know exactly how much interest I'll get and the tax to pay, but I find HMRC's calculations difficult to follow.

Sorry to be a pain, but where exactly does '-17219' come in the calculation, how does it mean '1434'?

Oops 'Previous code K23 meaning taxed 20% on £336. I can't  work out how K23 equates to 336.' 
What I meant was that an extra 336 was being paid on estimate of 1680.

And however bad a K (negative) tax code is the employer or pension payer using the code should not ever deduct more than 50% in tax from any individual payment.

I can confirm this, I was allocated a K code in November that was applied to one of my pensions, and it has taken exactly half of the December payment (within 1p) in tax, and I expect it to do the same for January - March.

That is the maximum tax that can be taken so probably more than that was owed.  Don't know if the extra will get carried forward to next year or if another pension will be used.

It's only been applied to 1 of my 2 pensions, so I guess I'll see whether there is any still to be paid that's included in next year's tax codes.