K code for PAYE

Newly_retired

Would someone be kind enough to explain how a K tax code works, please? 

Context - I receive SRP, and private pensions from three sources, taxed at BR.
I also receive a tiny foreign pension untaxed, and have savings interest in excess of £1000, so I complete Self Assessment. I can't make sense of the resulting calculation of tax owed, as it exceeds what I expect to pay on the foregn pension and interest from savings, so I am wondering if the K code comes into play?

Dazed_and_C0nfused

A K code is essentially a negative code, so instead of getting say £500 pay/pension each month with no tax deducted your employer/pension payer adds a national £500 to your pay/pension and taxes that as well as the rest of your actual pay/pension.

But there is an upper deduction limit of 50% so irrespective of how small the income which has a K code allocated to it is or how large the K code is you would never have more than 50% deducted at source.

To work out your equivalent to my £500 example you need to add a 9 to the end of the K code and divide that by 12 (assuming it is a pension paid monthly).

Linton

State Pension is taxable but is paid gross and will probably use up  most of your tax allowance.The K code ensures that the tax on your other income streams also covers the SP.

sheramber

Newly_retired said:

Would someone be kind enough to explain how a K tax code works, please? 

Context - I receive SRP, and private pensions from three sources, taxed at BR.
I also receive a tiny foreign pension untaxed, and have savings interest in excess of £1000, so I complete Self Assessment. I can't make sense of the resulting calculation of tax owed, as it exceeds what I expect to pay on the foregn pension and interest from savings, so I am wondering if the K code comes into play?

what I expect to pay on the foregn pension and interest from savings  AND State Pension.

State Pension is taxable income but paid gross.

Your personal allowances will be used to cover that first.

Newly_retired

I know that my SRP is taxable. 
Apparently this is not fully covered by taxing my main occupational pension at BR, hence the K code, right? But won't that be collected via PAYE, not SA?

newatc

The only logic I can see of the K code in your circumstances is that they get their money faster through the PAYE elements. 

Newly_retired

true. 
But are they mopping up the shortfull through SA? If not, why do they want more than I have foreseen?

Dazed_and_C0nfused

Newly_retired said:

true. 
But are they mopping up the shortfull through SA? If not, why do they want more than I have foreseen?

Why do you need to file a tax return 🤔

A K code in itself isn't a reason to need to file a return.

jem16

Dazed_and_C0nfused said:

Newly_retired said:

true. 
But are they mopping up the shortfull through SA? If not, why do they want more than I have foreseen?

Why do you need to file a tax return 🤔

A K code in itself isn't a reason to need to file a return.

Presumably because of the foreign income received from a pension?

Newly_retired

Yes. A mere £365pa  of tiny foreign pension.