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  • FIRST POST
    • MSE Guy
    • By MSE Guy 29th Mar 11, 3:06 PM
    • 1,628Posts
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    MSE Guy
    MSE News: Pensioners hit by further HMRC tax code errors
    • #1
    • 29th Mar 11, 3:06 PM
    MSE News: Pensioners hit by further HMRC tax code errors 29th Mar 11 at 3:06 PM
    This is the discussion thread for the following MSE News Story:

    "146,000 pensioners underpaid tax in the current 2010/11 financial year, which the Revenue wants repaid ..."

Page 1
  • NASA
    • #2
    • 29th Mar 11, 3:30 PM
    • #2
    • 29th Mar 11, 3:30 PM
    They underpaid tax, they have to pay it back, over time.

    Where is the problem?
    • Mikeyorks
    • By Mikeyorks 29th Mar 11, 3:44 PM
    • 10,287 Posts
    • 4,696 Thanks
    Mikeyorks
    • #3
    • 29th Mar 11, 3:44 PM
    • #3
    • 29th Mar 11, 3:44 PM
    Virtually all in this category receive a P2 (Coding Notice). Which says :

    It is important that you make sure that we have got your tax code right. The Notes will help you do this. If you contact us we will need your National Insurance number and tax reference. Please keep your coding notices; you may need them if we send you a tax return.
    Does no one check these any more or, as you will have kept the previous one, do a cross check.

    Whilst there's little excuse for HMRC getting this wrong on the 3rd (?) coding issue from this system. There's an awful lot of personal contributory negligence going on. At the level of an individual on PAYE ..... it is not that difficult to know your PA and what is traditionally deducted from it.
    If you want to test the depth of the water .........don't use both feet !
    • John_Pierpoint
    • By John_Pierpoint 29th Mar 11, 3:58 PM
    • 8,248 Posts
    • 7,388 Thanks
    John_Pierpoint
    • #4
    • 29th Mar 11, 3:58 PM
    • #4
    • 29th Mar 11, 3:58 PM
    We have done this story already, it revolves round the inability of the computer to recognise pensioners achieving pension age & the age of 65. It is the "Joined up Government" problem again.

    http://forums.moneysavingexpert.com/showthread.php?t=3135108
    Last edited by John_Pierpoint; 29-03-2011 at 4:00 PM.
    • Rupert Bear
    • By Rupert Bear 29th Mar 11, 5:27 PM
    • 1,267 Posts
    • 630 Thanks
    Rupert Bear
    • #5
    • 29th Mar 11, 5:27 PM
    • #5
    • 29th Mar 11, 5:27 PM
    Bad news on the affected pensioners but thats life. It happens. They have enjoyed the extra money and although it is not their fault it is pay back time.
  • ajrussell
    • #6
    • 29th Mar 11, 7:16 PM
    • #6
    • 29th Mar 11, 7:16 PM
    My Grandfather received a nice letter stating they wanted to claim 1100 back by April 1st.

    Thankfully I educated him in contesting it and playing dumb. After 15 minutes of playing 'dumb' they agreed to cancel the claim as they noticed an error on his file as they had not notified his previous employer that his tax code had changed.

    Andrew
  • mikejd1
    • #7
    • 30th Mar 11, 12:35 PM
    Pensioner Income Tax
    • #7
    • 30th Mar 11, 12:35 PM
    Why do the powers that be always blame the problems on a "computer fault" the computer is not at fault its the idiots who programme the computer. Computers as a rule only do what they are programned to do. And pensioners bare the brunt again. They way this country treats pensioners is utterly shameful.
  • down
    • #8
    • 30th Mar 11, 2:45 PM
    • #8
    • 30th Mar 11, 2:45 PM
    I've said it before: Pensions were paid for and should not be taxed as they are not earnings.
    • Pennywise
    • By Pennywise 30th Mar 11, 2:56 PM
    • 11,503 Posts
    • 22,190 Thanks
    Pennywise
    • #9
    • 30th Mar 11, 2:56 PM
    • #9
    • 30th Mar 11, 2:56 PM
    I've said it before: Pensions were paid for and should not be taxed as they are not earnings.
    Originally posted by down
    That's illogical. Following the same logic, if I invested in shares or a property, then the dividends/rents & gains shouldn't be taxed either. It's been the law for decades that pension income is taxable - it's nothing new and so pensioners should have factored in tax when planning for their retirement, just like an investor will factor in tax when considering what investments to buy.
  • down
    For Pennywise: State Pension was only added to the tax system about 3 years ago plus you used to be able to take a lump sum tax free from a company pension on retirement, it also gets taxed, that was introduced arround 2008/2009.
    • dori2o
    • By dori2o 31st Mar 11, 7:38 PM
    • 7,811 Posts
    • 13,104 Thanks
    dori2o
    For Pennywise: State Pension was only added to the tax system about 3 years ago plus you used to be able to take a lump sum tax free from a company pension on retirement, it also gets taxed, that was introduced arround 2008/2009.
    Originally posted by down
    • jem16
    • By jem16 31st Mar 11, 8:46 PM
    • 18,667 Posts
    • 11,465 Thanks
    jem16
    For Pennywise: State Pension was only added to the tax system about 3 years ago
    Originally posted by down
    Don't be riduculous - it's always been classed as taxable income.

    plus you used to be able to take a lump sum tax free from a company pension on retirement, it also gets taxed, that was introduced arround 2008/2009.
    Rubbish! I am entitled to a tax-free lump sum from my teacher's pension.

    http://www.direct.gov.uk/en/Pensionsandretirementplanning/Companyandpersonalpensions/CompanyPensions/DG_10026617

    Where on earth do you get your information from?
    • Pennywise
    • By Pennywise 1st Apr 11, 8:09 AM
    • 11,503 Posts
    • 22,190 Thanks
    Pennywise
    For Pennywise: State Pension was only added to the tax system about 3 years ago plus you used to be able to take a lump sum tax free from a company pension on retirement, it also gets taxed, that was introduced arround 2008/2009.
    Originally posted by down
    Wrong on both counts. Making fundamental errors does nothing to help your arguments.
  • Dalice
    Help - Now I am really confused!
    Two quotes from the main article -
    "While not everyone in that category (over 65) has underpaid, no-one outside that group is affected."
    "This same group of 146,000 pensioners also owed tax from 08/09 and 09/10 tax years. However, HMRC has written off these demands."
    I am under 65 and have just had a payment request for 09/10 for over 1,000 as my state pension had not been taxed and I was apparently on the wrong tax code. Now wondering whether this amount will be written off for me?
    • Dewpoint
    • By Dewpoint 14th Mar 12, 7:25 AM
    • 106 Posts
    • 25 Thanks
    Dewpoint
    HMRC - incompetent, useless
    After reaching pensionable age in Dec 2011 I received a "Notice of Coding" change from the HMRC Office in Liverpool which reduced my tax-free income substantially and contained several errors including one which stated that my code was being reduced because I will receive an estimated 5000+ in state pension for the year 2011/12, ie. a whole year's worth of state pension. Now anyone with a basic understanding of maths would be able to show that if a person turned 65 in Dec 2011 they wont receive a full year's pension by April 2012.
    I wrote to HMRC (twice + letters of complaint + letter to my MP), pointing out their errors to no avail. The change of coding went through anyway and my occupational pension provider promptly deducted half my normal pension income for January 2012, leaving me short of money at a time when bills are highest.
    The people who work for the HMRC are either morons or vindictive barstewards who are accountable to no one.
    • Jennifer_Jane
    • By Jennifer_Jane 14th Mar 12, 8:36 AM
    • 3,157 Posts
    • 4,365 Thanks
    Jennifer_Jane
    The other 'error' by HMRC is that the coding letter sent out when you are 64 (ie aged 65 during the following tax year) assumes a total income above 28930, despite having been on a pension of roughly 12,000 for the previous 2 years.

    Pensioners need to really read and understand these coding letters, I have a little sum on my spreadsheet, so can check my own and my friends' tax letters.

    It's absolutely disgraceful that HMRC should make this assumption which is not in the interests of the taxpayer.
    Last edited by Jennifer_Jane; 14-03-2012 at 8:39 AM.
    • Mikeyorks
    • By Mikeyorks 14th Mar 12, 10:40 AM
    • 10,287 Posts
    • 4,696 Thanks
    Mikeyorks
    After reaching pensionable age in Dec 2011 I received a "Notice of Coding" change from the HMRC Office in Liverpool which reduced my tax-free income substantially and contained several errors .
    Originally posted by Dewpoint
    The other 'error' by HMRC is that the coding letter sent out when you are 64 (ie aged 65 during the following tax year) assumes a total income above 28930,
    despite having been on a pension of roughly 12,000 for the previous 2 years.
    by Jennifer_Jane
    Easy way around both problems. Complete the P161 they issue just before State Pension age.
    If you want to test the depth of the water .........don't use both feet !
    • Dewpoint
    • By Dewpoint 14th Mar 12, 11:30 AM
    • 106 Posts
    • 25 Thanks
    Dewpoint
    Easy way around both problems. Complete the P161 they issue just before State Pension age.
    Originally posted by Mikeyorks
    Anything HMRC sends me to complete I do so - I'm very thorough when it comes to finance. But it seems there is nothing you can do to combat inefficiency and incompetence when it stems from a government department that appears to be accountable to no one.
    Even my MP, who confessed to me that he has received numerous complaints about HMRC, seems powerless to do anything about this continuing ineptitude.
    Last edited by Dewpoint; 14-03-2012 at 11:33 AM.
    • Mikeyorks
    • By Mikeyorks 14th Mar 12, 5:40 PM
    • 10,287 Posts
    • 4,696 Thanks
    Mikeyorks
    ....I'm very thorough when it comes to finance.
    Originally posted by Dewpoint
    In which case you would be aware that if they don't issue a P161 .... you should request one.

    I will receive an estimated 5000+ in state pension for the year 2011/12
    This comes from DWP, not HMRC. Hence the importance of the P161.
    If you want to test the depth of the water .........don't use both feet !
    • dampsquib
    • By dampsquib 14th Mar 12, 5:46 PM
    • 175 Posts
    • 97 Thanks
    dampsquib
    After reaching pensionable age in Dec 2011 I received a "Notice of Coding" change from the HMRC Office in Liverpool which reduced my tax-free income substantially and contained several errors including one which stated that my code was being reduced because I will receive an estimated 5000+ in state pension for the year 2011/12, ie. a whole year's worth of state pension. Now anyone with a basic understanding of maths would be able to show that if a person turned 65 in Dec 2011 they wont receive a full year's pension by April 2012.
    Originally posted by Dewpoint
    Actually .... that sounds correct to me! Due to the way the code number system works, they will have correctly included the equivalent of a full year's pension in your code, but should have also switched your code to be operated on a non-cumulative Month 1 Basis, which taxes each month is isolation and ignores what has happens in previous months. You would then have had roughly the correct amount deducted in January and subsequent months. However, if they forgot to switch you to Month 1 Basis, it would have resulted in a very very large deduction in January.
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