Is my understanding of this tax code notice correct ?

Dazed_and_C0nfused

Shylock_249 said:

Dazed_and_C0nfused said:

Shylock_249 said:

I thought the "Less Untaxed Interest" figure was an estimate of untaxed interest paid by banks/building societies less the 1k PSA based on the interest received in the last FY year?

My Wife's P2 shows Less Untaxed Interest of £13005 which is calculated (I think) because in the last FY she received £14005 in interest, a figure agreed by her and HMRC. My figure is different because I only get £500 PSA.

If that is correct is it for consideration that HMRC are estimating that you will received untaxed interest of £1170.oo?

Your assumption is wrong.

That is a common scenario but not everyone can make use of the £1,000 savings nil rate band so it wouldn't be relevant.

Thanks. 

You've lost me. Certainly on my P2 the note for Untaxed Interest says this is an estimate of the interest you will receive.........

I wonder what the note says on the opening poster's P2?  If the OP only received £974 why would there even be an entry of "Less Untaxed Interest"?

Thanks again

Because they have spare allowances.  Which are used before either of the 0% rate bands.

The savings nil rate band is the very last thing people can make use of, not the first.

Shylock_249

Dazed_and_C0nfused said:

Shylock_249 said:

Dazed_and_C0nfused said:

Shylock_249 said:

I thought the "Less Untaxed Interest" figure was an estimate of untaxed interest paid by banks/building societies less the 1k PSA based on the interest received in the last FY year?

My Wife's P2 shows Less Untaxed Interest of £13005 which is calculated (I think) because in the last FY she received £14005 in interest, a figure agreed by her and HMRC. My figure is different because I only get £500 PSA.

If that is correct is it for consideration that HMRC are estimating that you will received untaxed interest of £1170.oo?

Your assumption is wrong.

That is a common scenario but not everyone can make use of the £1,000 savings nil rate band so it wouldn't be relevant.

Thanks. 

You've lost me. Certainly on my P2 the note for Untaxed Interest says this is an estimate of the interest you will receive.........

I wonder what the note says on the opening poster's P2?  If the OP only received £974 why would there even be an entry of "Less Untaxed Interest"?

Thanks again

Because they have spare allowances.  Which are used before either of the 0% rate bands.

The savings nil rate band is the very last thing people can make use of, not the first.

Thanks, it's far too difficult for me to understand, so I'll NOT confuse myself further. 

You can take a horse to water but you can't make it think 😊

YorkshireLass173

Untaxed interest is driving me nuts!!. Like your wife I have retired early with a very small pension and have untaxed interest, this is how I survive. My pension does NOT take me over my personal allowance but my tax code is set to the same amount as my pension - what is the point of that? So my personal allowance is depleted none, of it gets used against the estimated untaxed interest figure, and the starting rate of nil band and the bank interest allowance are not applied - and my tiny pension gets taxed!!! Seriously someone needs to sort HMRC out - Martin Lewis: given the pensioners that will be taxed this year due to the low personal allowance we really need your help.

eskbanker

https://forums.moneysavingexpert.com/discussion/comment/82130161#Comment_82130161

If your tax code is set to the same amount as your pension then how is your pension being taxed? It could get taxed if the estimate for the pension income is too low, but you can adjust this within your online tax account to prevent that…

molerat

How much tax is actually being deducted from your pension ?

Change your estimated pension income to the full personal allowance and the code will miraculously change to the full 1257, simples. Nothing will of course actually change but it will make you feel better.