Tax query

eskbanker

johnnyren said:
There has been an obvious error by hmrc  in taxing my wage ,     

There are various parties who could have made mistakes here (HMRC will generally be reactive and respond to what they're told), so probably best get to the facts before deciding who's at fault?

DRS1

Do you have other income apart from the wage and the (tax free) pension?  Interest perhaps?

johnnyren

Dazed_and_C0nfused said:

johnnyren said:

MallyGirl said:

johnnyren said:

I’ve spoke to my ifa at length today regarding it ,   He assures me my 1400 pound pension drawdown from my pot is entirely tax free and separate from the earnings from my job
It brings in 6000 pounds a year ,   It’s under my allowance so no tax should have been paid

If he’s wrong then I’ll have to take it from there  

tax free drawdown (ie from the 25% tax free part of your pension pot) has no relation to allowances. A million pound pot could have a 250k tax free lump sum removed and incur no tax because of what it is rather than being under any sort of allowance

Yes that’s what I have been saying all along ,    There has been an obvious error by hmrc  in taxing my wage ,     

But how/why would that happen if your pension company had never reported any taxable pension income 🤔

I really have no idea.     As I said previously there was a change over in companies a few months ago ,     This is the first monthly wage paid out and I’ve been taxed ,  

molerat

You may find that you now have 2 jobs, wouldn't be the first time that company change overs have gone wrong.  The only way to find out though will be through your personal tax account.  2 minutes browsing your tax account can save hours holding on the phone.

Still begs the question why your IFA has been only drawing tax free money when you do not have enough other income to cover your allowance.

molerat

I have looked at what you sent me and the following leaps out

Is that the only income stream showing ?

Is that annual estimated income correct ?  If your April pay is the regular amount you will be receiving then your annual pay is well above that and you need to correct that annual amount.  

Do you have savings interest ? if you do there is a possibility they are using some of your allowance for that even though you would not pay tax on it, one of the things they do if you have spare allowance. I think it will come under "check your tax free amount" to see if they have allocated some to interest. Increasing the estimated annual income to the correct amount will have some of that interest removed from the calculation and allocated to the employment, the current code gives enough allowance to cover the current income estimate but if that estimate is wrong you end up paying tax.  Correcting that annual income should bring you back into not paying tax and what you paid in April should be returned in the next pay packet, do it now and the code should be changed in a couple of days.

As for the all tax free pension withdrawal. Your annual tax allowance is a use it or lose it thing.  By taking only tax free cash you are wasting that spare allowance and risking paying more tax in the future when you could possibly make more use of the tax free money, you should be taking as much taxable cash as you can within your allowance leaving as much tax free cash as possible for future use.

johnnyren

molerat said:

I have looked at what you sent me and the following leaps out

Is that the only income stream showing ?

Is that annual estimated income correct ?  If your April pay is the regular amount you will be receiving then your annual pay is well above that and you need to correct that annual amount.  

Do you have savings interest ? if you do there is a possibility they are using some of your allowance for that even though you would not pay tax on it, one of the things they do if you have spare allowance. I think it will come under "check your tax free amount" to see if they have allocated some to interest. Increasing the estimated annual income to the correct amount will have some of that interest removed from the calculation and allocated to the employment, the current code gives enough allowance to cover the current income estimate but if that estimate is wrong you end up paying tax.  Correcting that annual income should bring you back into not paying tax and what you paid in April should be returned in the next pay packet, do it now and the code should be changed in a couple of days.

As for the all tax free pension withdrawal. Your annual tax allowance is a use it or lose it thing.  By taking only tax free cash you are wasting that spare allowance and risking paying more tax in the future when you could possibly make more use of the tax free money, you should be taking as much taxable cash as you can within your allowance leaving as much tax free cash as possible for future use.

Hi thanks for looking 
I’ll have a look at you findings in more detail tomorrow ,    But on your first point ,      I have no other revenue streams apart from cashing in some shares I have but that is minimal revenue 

Your other point seems to be the problem ,  for some reason they have came up with this 2825 pounds being the amount I get taxed on ,   It’s ludicrous ,    I’ve already told them I should be earning approx 6000 pounds per year but still paying no tax 
on one of the screenshots it’s seems to actually say I can earn 12690 pounds before paying tax so there’s a contradiction ,     Thanks again 

molerat

You can earn £12690 but they have estimated you will only get £2825 from your job and have used he rest elsewhere.  Adjust that income to the correct amount and the tax should correct itself.