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Notices of Coding

Notices of Coding

I've had two amended notices of coding referred to me by two separate clients in the past week showing a reduced cumulative code for 2013/2014.

I've had to explain to the clients that since we are now into month 10 their pay packet will be considerably reduced but in my opinion HMRC should really be applying a month 1 code at this time of the year.

Upon phoning HMRC they advised me that, in both cases, they had added month 1 to the code sent to the employer. Have I missed something or will HMRC be receiving many such unnecessary calls from taxpayers or their agents?

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By K81
13th Feb 2014 10:01

there should be a note on the back of the tax code headed "special note" which explains that an underpayment may have arisen from start of tax year to date code issued..

HM Revenue & Customs don't actually put the week one/month one descriptor on tax codes to individuals.

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to Tim Vane
13th Feb 2014 11:04

I agree

K81 wrote:

there should be a note on the back of the tax code headed "special note" which explains that an underpayment may have arisen from start of tax year to date code issued..

HM Revenue & Customs don't actually put the week one/month one descriptor on tax codes to individuals.

I agree that the individual's P2 never shows the PAYE code with a Month 1 indicator and that there is usually a clearly headed Special Note saying (in a rather convoluted way) that the code would be applied on a Month 1 basis and that £x of arrears would be corrected by adjustment of the code for the following year (the source of endless confusion when doing SA tax returns!).

However, we have received a recent 2013/14 PAYE coding for a man who reached 65 in December and I was rather surprised to see what appeared to be a full year's state pension deducted from his personal allowance - there was no Special Note, but the Note about the deduction of the state pension included the rather confusing statement:

"We know you will not receive the full amount of this pension this year but we have reduced your tax-free amount by [the state pension for a full year] so that [your employer] will only tax you on the actual amount of pension you receive.  You will only be taxed on the pension for the number of months or weeks you get it."

The first sentence is a complete non sequitur, but the second sentence clarifies it (although they could have left out "months or").

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13th Feb 2014 10:31

Are you looking at the employee's copy of the coding notification or the employer's coding notification (P6)?

 

If its the employee's, I was under the impression that these never show the coding basis.

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