Updating noncoded income to avoid need for SA payments on account

mfn123

My wife and I are both retired with PAYE-coded pensions, and receive untaxed income (interest and dividends outside ISAs). For historical reasons, we still do self-assessment, so just report that income and pay the tax due at year-end rather than get it taxed during the year by PAYE adjustment. As a result, we haven't taken much notice of the amount that HMRC thinks is our 'noncoded income'.

This coming year (2026-27), OH may have to make payments on account at year end (because her liability will be over £1000, and less than 80% of her tax will be deducted at source).

To avoid this, I'm thinking she could amend her 2025-26 SA to request that noncoded income be included in her PAYE taxcode (as per HMRC PAYE12060), so that more than 80% is deducted at source. Of course we would first need to set the correct 'noncoded income' amount!

The online form allows you to request an updated amount, but does not separate it into the various kinds (savings, dividends etc). However, other parts of the site allow you to tell HMRC about untaxed dividends, savings accounts etc in more detail. I assume that level of detail is only needed for use by those who don't do self-assessment, but maybe I've got the wrong end of the stick?

Would we need to report the full expected amount of untaxed income as the 'noncoded' value (causing all of it be taxed via PAYE), or can we report a lower amount (i.e. enough to pay at least 80% via PAYE).

Does that make sense? Hopefully others have thought about this before and can advise for or against!

cc123mm456

I have just recently looked at this issue for myself, and I took some action that has dealt with it successfully, described below.

I'm in self-assessment due mainly to savings and dividend income. Up to tax year 25/26 my PAYE tax paid has always been above 80% of the overall tax due. That meant that even though the self-assessment balancing payment was higher than £1,000, there were no payments on account.

I calculated that for tax year 2026/27 the PAYE tax will probably be less than 80% of the overall tax due on income, meaning that I would then have payments on account added at the time of the 2026/27 self-assessment. I fully understand that this would not change the tax eventually paid. Even so, I prefer to keep things simple, and not have any POA to deal with.

This is my advice, based on my recent changes. I did this entirely online. No need to ring HMRC.

Firstly, DO NOT ask for changes to the non-coded income. As I understand it, non-coded means that it is income that is excluded from the tax code, so changing it will have no impact on the tax code. The non-coded income in my personal tax account has remained the same for multiple years, and it does not affect the tax codes at all.

Instead of that, use the option in the online tax account for "Add Missing Income", then within that section there are further options to choose Investment Income, then the sub-headings Savings interest or Dividends. Enter a rough amount of expected income for the current tax year.

It doesn't need to be exact because obviously at this stage the final amount is unknown. However I chose an amount that seems realistic, bearing in mind possible interest rate decreases later in the tax year (although that seems less likely now).

After submitting the form, it took about 6 weeks for mine to be processed, then I received notification of a new tax code for my PAYE income. On checking that, the correct adjustment had been made to take the tax on the expected savings income (less the £1,000 savings allowance) via my PAYE income during the current tax year.

I hope this helps.

mfn123

Thanks very much for your quick response, and particularly the warning about going down the wrong route with uncoded income!

Having added details of missing income etc, did you also need to amend your SA to allow use of income in your new taxcode, or did that just happen automatically? I tried to understand the process from reading PAYE12060, but it wasnt clear to me - amending the 2025-26 SA return seemed to be required, but I probably misunderstood!

cc123mm456

There's no connection at all between the procedure I described above and the self-assessment.

The self-assessment is completed after the end of the tax year, and it will include all the details of the actual taxable income for the previous tax year (including all savings and dividend income). The tax paid via PAYE is also entered in the SA, and that allows the balancing payment or refund to be calculated.

The procedure in my previous comment is only to advise HMRC of the estimated income from savings or dividends for the current tax year, to adjust the tax that is to be taken through PAYE. This is always going to be an approximate amount of tax.

The calculation will then be finalised after the tax year end, via the 2026/27 self-assessment. If the savings/dividends estimate was too high, there would be a tax refund due. If the estimate was too low, there will be a balancing payment to be made.

The reason I submitted my estimated savings/dividend income details was because my ratio of PAYE / Other income has changed, which I understand is similar to your situation. The tax that I would have paid via PAYE would have been much too low this year, where in previous years it was more than 80% of the total tax due.

mfn123

Sorry, I wasn't very clear in my previous question!

In our current SA submission for 2025-26, the checkbox at the end (SA100 TR6.3 "If you owe tax on savings, casual earnings and/or the High Income Child Benefit Charge for the 2026–27 tax year, we’ll try to collect it through your wages or pension by adjusting your 2026–27 tax code. If you do not want us to do this, put ‘X’ in the box"), we have always had the box checked.

I assumed we would have to resubmit the 2025-26 return with the box cleared in order to allow the taxcode to be adjusted. Perhaps I misunderstood the purpose of that box!

This would of course be in addition to using the online form as you say to capture the estimated income.

cc123mm456

Ah, now I understand.

No, that box is for a different purpose. It is simply to ask if you want to pay the amount of the 2025/26 balancing payment through a change to your tax code for the current tax year, or do you want to pay it directly to HMRC by 31st January 2027 (when the box is checked).

Like you, I always check the box, then pay the tax directly to HMRC by 31st January. The reason is that I like to keep things simple, so that I can understand the tax code more easily.

This is completely separate to the current year estimate of Savings/Dividends income for PAYE. There is no need to change it.

Edit, I referred to the wrong box there. I will update shortly

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/82022219#Comment_82022219

You are confusing two different boxes.

The one the op is referring to is about keeping the code for the current tax year up to date using information form the latest tax return.

You are referring to the other one, which is about collection of the actual tax due for 2025/26. Which would never be collected in the current (2026/27) tax code, it would be next year's code (assuming all the relevant criteria were met).

cc123mm456

Yes, I realised that I confused the boxes, thanks D&C

cc123mm456

Apologies, I should have mentioned that the procedure I described above worked for me, but in my case I haven't submitted the 2025/26 self-assessment, and I won't be able to submit it for some time yet. I'll need some data that isn't available yet (for ERI on ETF investments). I'll be submitting it later this year.

The much simpler approach is just to uncheck that box you mentioned, and submit the self-assessment, then the savings/dividend income for 2025/26 should be used to update your tax code for 2026/27.

The only thing to bear in mind is the amounts that would be used will be the 2025/2026 amounts.

If the expected amounts for 2026/27 are significantly different to 2025/26, then I suggest that, after submitting the amended self-assessment, you will need to wait for the tax code change first, then after it is received, go in to the online tax account and submit your amended estimates of Savings/Dividend income the current tax year.

mfn123

The one the op is referring to is about keeping the code for the current tax year up to date using information from the latest tax return.

So, if we just cleared checkbox 3 and resubmitted the 2025-26 SA, what would happen to the 2026-27 coding?

As things currently stand, the account has an uncoded income of over £17k (because of one-off inheritance income reported in 2025-26 SA).

By clearing the box and resubmitting, will that 17k be applied to the 2026-27 code? Way too much …

If I enter estimated figures for interest (7k) and dividends (4k) for 2026-27 (as recommended by @cc123mm456), will those just replace the uncoded income when deciding the tax code, or (worst case) will they add to it?

Another option would be to amend the uncoded income to zero as well.

I suppose I could suck it and see, but I don't want to get wildly wrong tax codes sent to the pension providers, then have to update them later.

Sigh. I wish I understood the rules of the game… (it was all seemed easier when I was employed and just doing SA to get ad hoc SIPP contributions relief…)

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/comment/82022336#Comment_82022336

You appear to be mixing up two different things.

Submitting a tax return (or amended return) with actual income details.

And submitting an update via your Personal Tax Account.

If you submit an amended tax return how will that allow you to provide estimates figures for the current tax year 🤔

And just for the avoidance of doubt non coded income is never included in your tax code. It is simply used to calculate if your Personal Allowance needs to be tapered, if a High Income Child Benefit Charge should included in your tax code or if Married Couple's Allowance needs to be restricted. And I suspect none of those are relevant to you.