Pension, salary & Two different tax codes

Buccmender

I've been notified by HMRC that my Pension tax code will be changed in April '08 from 577T to 543L, now I know what this means in alowance terms - I'm going to be worse off!
However I also have a Salary with a tax code of 522 M1.
Can anyone tell me, 1/ If HMRC are aware of my two incomes, why are the tax codes different?
2/ If my allowance is £5430 before taxation starts and this is 'split' between my two incomes can I appeal this as, I will undoubtedly be a lot worse off and may even lose my home because of it?
I don't particularly want to ask HMRC primarily because I don't trust them.
I'm 57 and single.
I've searched through the Forums but not found an answer to this question, but like most searches it depends on the keywords used, however if you know of a thread please point me to it.

jem16

Buccmender wrote: »

I've been notified by HMRC that my Pension tax code will be changed in April '08 from 577T to 543L, now I know what this means in alowance terms - I'm going to be worse off!
However I also have a Salary with a tax code of 522 M1.
Can anyone tell me, 1/ If HMRC are aware of my two incomes, why are the tax codes different?

Your two tax codes should be different. At the moment you are getting two sets of allowances which is wrong as you will be underpaying tax.

Are HMRC aware of your two incomes? Normally what would happen is that your tax code would be used with your main source of income and BR would be applied to your 2nd source of income.

2/ If my allowance is £5430 before taxation starts and this is 'split' between my two incomes can I appeal this as, I will undoubtedly be a lot worse off and may even lose my home because of it?

It is possible to split your allowances between the two incomes and if done this would be correct. Your are not entitled to two sets of allowances - your are entitled to £5435 for your whole income.

I don't particularly want to ask HMRC primarily because I don't trust them.
I'm 57 and single.

You will need to contact HMRC and get this sorted asap. Eventually they will catch up and be looking for any tax that you have underpaid.

What are your two incomes and what tax codes have you been on and for how long?

SonniC55

Bucc

Best thing you can do here is contact HMRC asap. The longer you leave this to continue the higher the underpayment of tax will be that HMRC will seek to recover.

It sounds like the local office for your employment income and for pension income are at 2 different districts and have never been matched up. Is this the first tax year that you have received both sets of income in?

Im guessing that your pension income commenced in 2007/08 in which case a BR coding should have been operated.

As to splitting your coding against incomes it depends on your own circumstance. If your pension of employment income is over the threshold it may be simpler to assign your allowance against one and pay BR on T'other.

Regards

mrkbrrws

Do you have the coding notice for the 577T? Presumably there was some allowance for something that has now ceased. Are you agreeing with that because if it should continue you would have to contact HMRC to put it right.

The 522L M1 is a code for this year, I assume. The code you have just received on your pension income of 543L will be for the year starting 6 April. That explains why they are different, but as already posted you should not have two personal allowances being given against two sources of income.

System

If either of your sources of income comes from a sensitive source such as military, civil service, celebrity, MP etc then it could be that the record is held securely. This would mean that it would only be visible to the staff who work at the tax office which deals with that source. This in turn would mean that the tax office which deals with the other source would be unaware of your second income and so would give you duplicate personal allowances. In any case you need to contact HMRC asap in order to avoid an underpayment.

Murdina

This is an extremely common situation because PAYE records are held by employer, not individual - although HMRC are aiming I believe to start to alter this shortly.

Strictly a second employer or pension provider should ask you to complete form P46 (since they would not have a P45, as you had not left the first job) when you start to get that income. If everyone did this, then the problem would happen much less often. Why? Because this form enables you to tell HMRC you have another job/pension and meanwhile your employer/pension co ought to follow the PAYE rules (which many do not) and apply code BR, not just give you the personal allowances on a month 1 basis again.

You must act IMMEDIATELY because HMRC will be totally unsympathetic about the underpayment you are going to have. As stated above, the longer you leave it, the worse it will be. Once it gets big enough, it will not be coded in and instead you will be asked to pay it all at one go!

I've seen this happen so many times............

Buccmender

WOW! This site really works! Many thanks to one & all for your helpful advice, very much appreciated