Pension Tax Code

[vim_fuego]

I am not stupid as such and can walk/chew gum simultaneously and ride my bike really fast and everything however,

When I stare at anything from HMRC the words and numbers begin to look like the enigma code and I get angry...very angry,

So can someone who understands this sh1t tell if a tax code change from K159 to K66 for the remainder of this tax year is a good or bad thing?

 

[needsabiggerfuse]

Read and weep.

LINKY BIT

Or plug in the values, and see the difference here:

LINKY BIT 2

 

[FOMz]

Have you spoken to them...? I've had a whole host of problems with them since leaving. Obviously Wage+pension is a very difficult thing for them to comprehend.

If you do mate, let me know the result?

 

[Teh Wal]

Surely the notes that come with it should make it perfectly clear mate?

I mean, shouldn't they?

please?!!

sob.

DT_Xtremez_38:

 

[LilStill]

Your total allowances are less than total deductions, therefore to work out your taxable income it is "Your Income + Tax Code" rather than "Your Income minus Tax Code" like it is for most people, who are on L codes. This change should be relatively good for you, as the code is "Number x 10 + 9". K159 means your taxable income would be "Your Income + (159x10+9)" or "Your Income + 1599". This change in tax code means your taxable income is now "Your Income + (66x10+9)" or "Your Income + 669". For example, then, if you are earning £20k, your taxable income has changed from £21,599 to £20,669. Confused yet? Apologies for the lack of spaces, DII...

 

[vim_fuego]

Let's keep this simple...I think from what you are saying its a good thing?

I nearly 3 years out and so far either in October or March I get a letter of the tax man telling me either I've buffed it or they have! I got a cheque one year but only for £50!

 

[Teh Wal]

3 years... nearly 6 here mate and the taxman is still at odds with me DT_Xtremez_41:

 

[Ex-Splitter and Proud]

13 years out Vim...... and still getting effed about by HM Bloodsuckers, despite completing all their paperwork..... just how they asked for it.

I even ran away to hide in NATO land, but the feckin' leeches found me......

As a wise men once said, there are only two certainties in life..... death and taxes
DT_Xtremez_42:

 

[AlfM]

Basically If you are working and on PAYE all your allowances are set against your wage, your pension is wholly taxed. Saves a pay accounts department from having to think too hard.

 

[Keyser Söze]

Been out 4 years and every year I have another bill where I have apparently under paid income tax and I'm PAYE. I get zero tax relief on my pension (i.e. I pay full 40% tax on ALL of it), and I've got a tax code of 391L, suppose I should be grateful last years tax code was 372L ffs how can I be underpaying tax ffs.

Thought my code should be 944L like everyone else?

 

[busby1971]

Most tax code have the letter at the end meaning you have a tax free allowance, the bigger the better.

Tax code with the letter at the beginning means you owe the tax man money, there are plenty of different reasons for this, the lower the better.

Any misunderstandings above caused by predictive texf

 

[Rigga]

What the Tax man prefers to do is adjust your pension Tax rate to suit your "Earnings Rate" (Upper or lower Tax rates). This allows them to keep better tabs on your PAYE tax rate by their big computer knowing that your other earnings are also taxed "correctly" and allowing them to adjust one earning rate instead of two.

Hope this helps - but it never does with taxes.

 

[fileeth]

K letter in front of your tax code means you owe them.DT_Xtremez_41:
- and has been said before, L letter after means you're on the right side for tax efficiency?DT_Xtremez_19:

Best bet is to get your tax allowance on your pension done at 40% (if you're earning that high - if not you should have done better before you left!!! - awaits incoming) and get your tax allowance off loaded against you income so you have control with pay/tax adjustments as they happen . Its easy just ring uop the tax office and talk to them because believe it or not they are very helpful!!

 

[vim_fuego]

Thanks for all the replies. This was only against my pension and only for the end of this tax year. The sooner they make mil pensions tax free the sooner I'll fully understand them! I phoned the tax man when I first left and although difficult to understand (heavily accented Indian chap) I did find that they tried their best to get me on the most bounteous deal...

 

[Ex-Splitter and Proud]

Basically If you are working and on PAYE all your allowances are set against your wage, your pension is wholly taxed. Saves a pay accounts department from having to think too hard.

That's not necessarily the case, although it may be the default position for HMRC. You can switch it so that all allowances are against your pension, then your employer can deduct the "full" tax (whether that's basic or higher rate) from your salary.

 

[justintime129]

That's not necessarily the case, although it may be the default position for HMRC. You can switch it so that all allowances are against your pension, then your employer can deduct the "full" tax (whether that's basic or higher rate) from your salary.

Thats what I do, all allowances against pension. Wages taxed at full rate.

 

[fileeth]

it all boils down to 'horses for courses' and what ever suit s your own circumstances!!

 

[Hu Jardon]

On Tuesday I got a revised K code and in amongst the 7 "explanatory" notes was a line about me having paid £347 too much in a previous tax year 7 there was another note re-interest on savings that I've spent so I decided to phone them yesterday (Wednesday). Nice chat with Gareth from Cardiff who took 56 minutes to tell me he had it all squared away, that I would probably get another code as I had overpaid. Obviously I was happy as Larry - gets home the same day to get a letter from the same tax office telling me I owe them another £970 - I fekkin surrender

 

[vim_fuego]

Update and some LFE from me on this subject...

I got my pension advice letter through yesterday which for those who don't know tells you how any tax code will affect your net sum and also what you net sum will be. In my case they have decided to take a cool £100 more off me a month so in essence my tax bill is already £1200 more than last year without seeing any effect on my main income yet!!

So on the phone I got to the tax man and a number of things became apparent.

1. Every year a computer somewhere in HRMC has a go at estimating your income for the coming year

In my case last year it estimated I had dropped 3.5k in income for some reason even though on the phone the bloke stated it always estimates a modest increase!

2. If you have a military pension it struggles to know what to do with this.

It automatically makes it your primary income and taxes the lot at 40% [in my case] because of my other income. My main income is then classed by them as my secondary income and given the code of 'BR' which means all taxed at 20%.

3. If you have a military pension and another income [so yo have a job after leaving as well and especially if you are in the 40% bracket] you must phone then every year once you know what your income is for the coming tax period.

So after you get your company pay rise through and have done the math give them a bell. Make sure you know what your annual gross pension is and also have your NI number handy for the security check. This annual call should save you under or over paying anything as long as your pay stays stable for the whole period. If you don't then the random number generating wage estimtion computer will have a go on your behalf and potentially feck you up!

Hope this helps

 

[Past Engineering]

I left in 1999 and got a decent job and from then untill 2007 my tax was sorted correctly as advised when I left i.e. my RAF pension was at 20% base rate and all allowances and any 40% tax liability came off my wages. Then in 2008 when the new computer was put in that was when the trouble started, it was discovered that I was in the 40% tax bracket and had not paid enough tax for the previous year (2007) and my personnel allowance would be reduced to claw back the money owing, come 2009 they reduced this furhter as apparently I owed them for 2007 still and now 2008, I have been fighting them since on and off.By the way anyone who is now in the 40% bracket don't forget you should let the HMRC know how much a year you pay into charities as this increases your personal allowance. This year I have been told that I owe £371 for last year so my tax code going forward is 146L, I have a raft of documents from the tax office along with the gen on the notice off coding instructions and I know how they work it all out and using their own tax calculator choosing option for two incomes it will tell you if you have paid too much tax (based on the P60s gen).I did get the original princely sum of tax owing written off as they had failed to manage my tax affirs correctly, and then they told me when I declsred my charitable payments that they actually owed me £721 when I did not get it I phoned and then got a new notice of coding telling me I actually owed them this amount after several weeks of phone calls and letters and I finally got the check. I find the best thing to do is let them get on with it, but what really annoyed me last year and this is the budget announcement that by increasing the personal allowance a lot more people would pay less, or none at all of their wages at 40%, then they actually lowered the 40% threshold which meant last year my wages went down by £70 a month and this year they did it again so I will actually be paying another £7 a month in taxes from this pay day, and with the lower personal allowance this year my wage packet is going to be less per month than it was two years ago and I have had two reasonable pay rises as well, so I have just resigned myself to the fact that the government/HMRC are robbing gits and the more you try and fight them the more they shaft you.