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  • FIRST POST
    • caveman38
    • By caveman38 17th May 19, 7:51 AM
    • 936Posts
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    caveman38
    Tax on Savings
    • #1
    • 17th May 19, 7:51 AM
    Tax on Savings 17th May 19 at 7:51 AM
    My wife has just realised through her wage slip that her tax code has changed. She hasn't received notification through the post.
    She is a low earner 13,000 per year but has a good savings pot and received 1,500 interest last year. Because of the nil rate band (1,000) and starting point (5,000) she paid no tax.
    However even though her earnings and interest will not change for 19/20 the HMRC have reduced her code by 150 points and she now pays additional tax.
    Is this the new protocol even for low earners whose total income (including interest) is unlikely to exceed 18,500.
    It has happened to me also but I have 2 pensions and earn in excess of 20K and accept it.
    Can she avoid tax being paid up front, as I assume it will be returned at end of year or adjusted for new tax year 20/21.
    Or, is it a mistake?


    I now realise I have posted in wrong forum. Can it be answered or transferred please.
Page 1
    • frugalmacdugal
    • By frugalmacdugal 17th May 19, 7:57 AM
    • 6,557 Posts
    • 5,619 Thanks
    frugalmacdugal
    • #2
    • 17th May 19, 7:57 AM
    • #2
    • 17th May 19, 7:57 AM
    Hi,


    here's a similar thread, might help explain.
    Y'all take care now.
    • caveman38
    • By caveman38 17th May 19, 8:07 AM
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    caveman38
    • #3
    • 17th May 19, 8:07 AM
    • #3
    • 17th May 19, 8:07 AM
    I have read through that, but must confess to be a bit confused. As her total income including interest is not going to exceed 14,500 will the HMRC assess that as being less than 18,500 (single persons tax code, stating rate and nil rate) and will she be rebated, adjusted for the next year or neither.
    • Dazed and confused
    • By Dazed and confused 17th May 19, 8:42 AM
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    Dazed and confused
    • #4
    • 17th May 19, 8:42 AM
    • #4
    • 17th May 19, 8:42 AM
    I think the problem is most likely to be that your wife's estimate of her earnings is more than HMRC think it's going to be.

    As a result your wife (in HMRC's eyes) has spare Personal Allowance and her tax code is adjusted to reflect the fact that the spare Personal Allowance has been used by the interest. The intention isn't to make her pay tax. That is happening because the tax code calculation isn't as accurate as it could be.

    First step, get her to check her tax code details on her Personal Tax Account on gov.uk and let us know what HMRC have as an estimate of her taxable pay/wage/salary for 2019:20.

    Has she applied for Marriage Allowance for 2019:20?

    What is the make up of the code at the moment?
    Last edited by Dazed and confused; 17-05-2019 at 8:47 AM.
    • Dazed and confused
    • By Dazed and confused 17th May 19, 8:49 AM
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    Dazed and confused
    • #5
    • 17th May 19, 8:49 AM
    • #5
    • 17th May 19, 8:49 AM
    Because of the nil rate band (1,000) and starting point (5,000) she paid no tax.
    This wasn't the reason she didn't have any tax to pay, it was purely down to Personal Allowance and savings starter rate band.

    The savings nil rate only kicks in after those two have been used.
    • caveman38
    • By caveman38 17th May 19, 9:14 AM
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    caveman38
    • #6
    • 17th May 19, 9:14 AM
    • #6
    • 17th May 19, 9:14 AM
    Thanks D&C. Her new employer (TUPE'd to new company)from 1/4/19) had sent assessment for the forthcoming tax year of earnings of 10,044 because they were unaware of weekend enhancements which take her money to nearer 13,000. From what you are saying HMRC are assuming total income of less than personal tax code and are saying she has spare allowance - I see.
    Would your advice be to allow a couple of months to settle and show the correct monthly pay and fill in the PTA with additional income and hope that the tax on savings is removed.


    BTW her interest on savings is 1,521 and her code adjusted to 1097
    • Dazed and confused
    • By Dazed and confused 17th May 19, 9:41 AM
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    Dazed and confused
    • #7
    • 17th May 19, 9:41 AM
    • #7
    • 17th May 19, 9:41 AM
    I don't see any need to wait as she is paying more tax is really necessary.

    She might be able to update her taxable pay/wage/salary value on her Personal Tax Account but I don't know if that on its own will prompt w new tax code.

    If not she will need to phone HMRC and give them the pay figure and ask for her tax code to be reviewed - taxable pay of 13k means there are no spare allowances so the savings interest will all be taxed at the savings starter rate of 0%.

    And as a result her tax code should return to 1250L. There is no need for her to ask for the interest deduction to be removed, it should just happen automatically when the new tax code is calculated (with a pay figure of 12,500 or more).

    With any refund due being automatically sorted by the employer the next time they pay here after receiving the new tax code.
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