Wrong tax code

moving1moretime

I dont know "Dazed" this is what I'm trying to learn and understand, which these posts and replies are definitely helping me understand further, and why i came on in the first place, as I was under the impression I had the wrong tax code, this thread is helping me to understand how it all works and lessoning the stress it is causing me, I'm not an expert in tax, but I'm trying to learn and understand it all.

Dazed_and_C0nfused

moving1moretime said:

I dont know "Dazed" this is what I'm trying to learn and understand, which these posts and replies are definitely helping me understand further, and why i came on in the first place, as I was under the impression I had the wrong tax code, this thread is helping me to understand how it all works and lessoning the stress it is causing me, I'm not an expert in tax, but I'm trying to learn and understand it all.

A tax code is something an employer or pension payer needs so they know what tax, if any, they need to deduct from your earnings or pension.

If you don't have any earnings or pension then a tax code is utterly irrelevant.

NB.  DWP do not operate PAYE on the State Pension

moving1moretime

Thank you all of you so very much for your help on this, my understanding of all this is much clearer now. I feel less stressed about it all now, and that is a big thing for me 💐 

RG2015

The OP stated earlier that, “everything I read states it's my responsibility to make sure my tax code is correct”

Is this correct?

Apologies if this has already been covered and I have missed it.

moving1moretime

RG2015 this is definitely my understanding and from what Ive read yes, but the kind posters in this thread have reassured me that this tax code is irrelevant as I have no PAYE income, so it not being used. I hope you are able to sort any issues you may or my not be having.

RG2015

moving1moretime said:

RG2015 this is definitely my understanding and from what Ive read yes, but the kind posters in this thread have reassured me that this tax code is irrelevant as I have no PAYE income, so it not being used. I hope you are able to sort any issues you may or may not be having.

@moving1moretime

Thank you for your reply. HMRC frequently issue an “incorrect” tax code for me. And I have just searched online and it does appear that I should inform HMRC if I believe my tax code is wrong.

In practice though, if it does not affect the amount of tax paid, then there is no adverse consequence.

In previous years I have informed HMRC of errors in my projected untaxed interest received, resulting in an incorrect tax code. This has been both in my favour and favour of HMRC. They have often ignored my input so I now believe there is little point in informing them.

I do know that HMRC have a process for collecting unpaid tax in the subsequent year. Therefore, for me there is no danger of underpaying income tax.

moving1moretime

RG2015, you seem well versed in handling your tax affairs, I'm pleased you are able to handle any issues you cross with confidence, and hope they are far and few between moving forward.

eskbanker

RG2015 said:

The OP stated earlier that, “everything I read states it's my responsibility to make sure my tax code is correct”

Is this correct?

Apologies if this has already been covered and I have missed it.

I'm not convinced it's correct as stated, but the taxpayer is ultimately responsible for ensuring that the correct amount of tax is paid, and informing HMRC of any variances in income that HMRC are unaware of, rather than validating tax codes themselves as such:

If HMRC has the wrong information about your income, you may be given an incorrect tax code.

To correct your tax code, make sure HMRC has up-to-date details about your income.

Check what you need to do if you’re on an emergency tax code.

If you think your tax code is wrong

If you think your tax code is wrong, you can use the Check your Income Tax online service to:

• update your employment details
• tell HMRC about a change in income that may have affected your tax code

For example, you can:

• add company benefits
• add missing employers or income
• claim employment expenses
• update your estimated taxable income

HMRC may change your tax code as a result of the updates you make in the online service.

https://www.gov.uk/tax-codes/how-to-update-your-tax-code

af1963

Lots of "you can ..." and " HMRC may ... " there, rather than "you must..." and "HMRC will..."

RG2015

eskbanker said:

RG2015 said:

The OP stated earlier that, “everything I read states it's my responsibility to make sure my tax code is correct”

Is this correct?

Apologies if this has already been covered and I have missed it.

I'm not convinced it's correct as stated, but the taxpayer is ultimately responsible for ensuring that the correct amount of tax is paid, and informing HMRC of any variances in income that HMRC are unaware of, rather than validating tax codes themselves as such:

If HMRC has the wrong information about your income, you may be given an incorrect tax code.

To correct your tax code, make sure HMRC has up-to-date details about your income.

Check what you need to do if you’re on an emergency tax code.

If you think your tax code is wrong

If you think your tax code is wrong, you can use the Check your Income Tax online service to:

• update your employment details
• tell HMRC about a change in income that may have affected your tax code

For example, you can:

• add company benefits
• add missing employers or income
• claim employment expenses
• update your estimated taxable income

HMRC may change your tax code as a result of the updates you make in the online service.

https://www.gov.uk/tax-codes/how-to-update-your-tax-code

Thanks @eskbanker

My main issue is untaxed interest. The standard HMRC process is to use the previous year's actual interest for subsequent years. This interest amount will be used in the tax code calculation.

Hence the actual for 24/25, as advised to HMRC from the banks and building societies, is used as the estimate for 25/26 and 26/27.

The initial 25/26 estimate would have been the actual for 23/24, but this would be updated when 24/25 is finalised.

My information on the actual and estimated interest is many months ahead of HMRC's information.

As previously stated I have updated HMRC online but they always replace my figure for future years.

I see no point now in continually advising them of a more accurate estimate when they ultimately ignore it.