Personal Allowance

Foxer1974

Can someone please explain why my allowance is dropping to 841, apparently this is based on projected earnings for 26/27 are we paying tax on money not eared yet?. As PAYE surely tax is paid on money earned above the PTA

masonic

HMRC does project things like interest income forward if you are earning enough to pay tax on it. They will then readjust your tax code when actual figures are known. This way you pay tax on expected interest as it is earned. If you know your interest is going to be lower, then you can ask HMRC to amend their figure, which can be requested through your personal tax account.

Woodstok2000

HMRC will make assumptions about your next years earnings (interest, dividends, salary etc) and use that to calculate your tax code. It means youre less likely to be hit with a big bill at the end of the year.

Does 842 seem about right for this year (25/26), and are things likely to change significantly in 26/27? If so, you can inform HMRC and they'll adjust the code accordingly.

Foxer1974

I guess my point is if we are paying tax on all earnings above PTA why is it changing if you are paying the correct tax.

Isthisforreal99

https://forums.moneysavingexpert.com/discussion/comment/81937904#Comment_81937904

That chart is for the Scottish income tax rates?

Still not clear what your actual question is - what is your tax code to reduce it to £841?

masonic

https://forums.moneysavingexpert.com/discussion/comment/81937904#Comment_81937904

Your tax code denotes how much of your PA is available for PAYE earnings. Savings interest is not taxed at source using your tax code, so a deduction is made from your PA such that your PAYE tax covers it.

Woodstok2000

https://forums.moneysavingexpert.com/discussion/comment/81937904#Comment_81937904

What Income do you have apart from PAYE earnings? Dividends, interest, rental etc

Foxer1974

Only savings that have already been taxed at source and place in savings account, but not savings worth 4k of interest

masonic

https://forums.moneysavingexpert.com/discussion/comment/81938219#Comment_81938219

Savings are not income, and savings are not taxed. It is interest that is taxed, and that tax is not deducted at source. If you are not expecting to earn £4k of untaxed interest in this tax year, then tell HMRC to update the figure to what you are expecting to earn.

RedImp_2

Wondering if that’s a reference to paying tax on salary of which the excess is saved in an account earning interest. Nice thought but not how it works of course.

Best to check tax account for last year, may be paying back under paid tax from previous?

Otherwise my friend’s tax code went completely wrong when he changed jobs and HMRC assumed he had two incomes so check you haven’t similar .