tax codes

BOATRACE

I had new tax codes in september for three small pensions, these are my only income @£10500
Next week I get my first state pension but i have paid £200 tax on one of my work pensions which now have the codes K ends X and the other two ends T
I can see that they have calculated the I will have an additional £6000 in state pension between now and the end of the tax year but they have estimated i will earn £25,000?
Where do I start to unravel this, my new untaxed allowance is about £1000

sheslookinhot

I think HMRC assume you will be getting a full state pension. I will get the full state pension of £230 per week from end of August, but my personal tax account has me getting £11,970 instead of £8200.

Dazed_and_C0nfused

sheslookinhot said:

I think HMRC assume you will be getting a full state pension. I will get the full state pension of £230 per week from end of August, but my personal tax account has me getting £11,970 instead of £8200.

That is true for some people, usually where they are already liable to tax, but not everyone.

https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye76086

sheramber

Your code number means you are allowed 1/12 of your allowances each month.

By including a year’s pension  they will collect tax on 1/12 of the amount, which is correct.

If they only included  the lower amount you will receive for part of the year they would only collect tax due on 1/12 of that lower amount instead of the full amount. 

itsthelittlethings

Tax codes are basically pretty simple. There is no magic.

molerat

itsthelittlethings said:

Tax codes are basically pretty simple. There is no magic.

Yes the code is pretty simple but how it is arrived at is often far from simple.  In quite a few instances the calculation is fudged to reach the correct outcome.

badmemory

Ignoring tax codes etc.  Add up your 4 income streams for the year.  Take off £12570.  Divide what is left by 5.  Do you get a figure similar to £1400 which is 7 months worth of £200.

Remember the hardest bit of this is the state pension as they count it from when due not when paid.  So if your payment is due mid March then you could well have another 3 weeks to count before the end of the tax year.

It really is basic arithmetic but they put the word codes in there & it throws a lot of people.

BOATRACE

Thanks for the information, I will give them a ring in the morning. Yes the codes did throw me a bit