I'm a basic rate taxpayer- currently on 747L
Just received a tax coding - to find it's now K15718 with no change in personal circumstances
Can anyone beat this error?
Do HMRC have no reasonableness checks in place?
Replies (18)
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Hmmm
I have had several clients who have suddenly had £10k of inveestment income added to their paye code, even though they were not higher rate taxpayers last year. I think:
1. HMRC like to get as much tax up front as possible and will grudgingly give a refund if you challenge it later; and
2. Are maybe preparing for the child benefit cap and will give the powers that be long lists of people who are higher rate taxpayers when in fact they are not...
me too
I have had several clients who have suddenly had £10k of inveestment income added to their paye code, even though they were not higher rate taxpayers last year.
Me too - although HMRC have been happy to take it off once I've phoned them up. However, I could think of better things to do.
Yup - had this a few years ago.
HMRC are simply trying to include as much as possible into PAYE so they get the money up front. Given the current deficit, I suppose this is understandable, but from my perspective is not acceptable. The reason that they do this is that nine times out of ten they probably get away with it.
With me it was dividend income, I simply wrote them an official complaint:
"Dear Mrs Lamia,
Today I received a further notice of change to my PAYE code despite previous complaints in respect of this practice (REF: 999/SA/AB12345/Proc/DC99AB et al).
As stated in my letter of 1st March 2008, I am sick and tired of the constant tinkering of my tax code where it is neither wanted NOR required.
Kindly restore my tax code to that of a standard taxpayer who receives no benefit-in-kind from his employer and stop all future changes.
The presumption that I should be taxed up front through PAYE for non-PAYE related income is offensive in the extreme. These matters are appropriate for the Self Assessment process and that is where they will remain and the timing of payments likewise.
Mr. Mittendus Arida"
* Names have been changed to protect the guilty.
Do you complete a tax return?
Probably not from the information in the OP.
If you do Ticking Box 3 on page 5 of the main return should stop coding adjustnemts. To quote the TR Guide @ pps 22 & 23
"Box 3 If you are likely to owe tax for 2011–12 on income other than employed earnings or pensions
...
If you would like us to collect your 2011–12 tax this way there is nothing for you to do now; leave box 3 blank. We will automatically change your 2011–12 PAYE tax code.
If the amounts of income are estimated to exceed £10,000 we would not normally amend your PAYE tax code for the excess amount above £10,000 – unless you tell us you would like to pay all of the tax in this way.
Alternatively, you can pay the tax direct to us, after you have completed your tax return for 2011–12. You will either have to make a single payment by 31 January 2013, or in certain circumstances we may ask you to make two payments on account of your eventual tax bill, one by 31 January 2012 and one by 31 July 2012 (with any balancing payment due
by 31 January 2013). If you prefer to pay this way, please put ‘X’ in box 3.
If you do, you will be sent a return for the following year."
@ACDWebb
If a client is not a higher rate taxpayer, then I have not ticked the box to ask them not to adjust tax codes if "you are likely to owe tax for 2011/12" because if they owed nothing extra in 2010/11 then why should HMRC think they will owe anything for 2011/12?
But they do adjust the codre anyway ... on a regular basis. So next year I will tick that box regardless of whether or not I think the client will owe extra tax next year.
@taxhound
I know what you are saying and IIRC this was a new tick box this year. Went through it myself with the code being adjusted unnecessarily on/off Mth1 add cars, remove cars & all sorts of other shenanigans, but nothing in the league of the OP. All down to the automating of the HMRC systems to code things unless told not to.
On the flip I have also seen reliefs that are nothing to do with PAYE being automatically coded so it's not always bad.
Client Wishes it was true
Not quite in the same realm of K Code but just had to alter a K Code for for a client which was K6746 from 747L.
It included state pension of £74056 for the year! I'm sure the client would be very happy to pay on this code if she was receiving that level of state pension - if fact she isn't receiving anything - HMRC uprating system strikes again.
Me too
Last month I got a new tax code - moving from a pretty standard code to 58T. According to HMRC I was earning over £115k so I was no longer entitled to my personal allowance and I owed them £3k in tax. I got hold of them and got them to change it back, but too late for payroll so they got an extra £240 of tax from me. I asked the guy what the basis was for changing my tax code - it turned out that they had decided I was still holding down my old job as well as my new job and was therefore earning double the amount! I'd have thought the P45 would have made it clear that I had left.
This is clearly a lack of checking that allows a code to be changed so significantly when they should have been aware of all the facts. So now they have changed it back and I got my new code (which gives me slightly more allowance than before) and it still states that I owe them money - how they work this out is beyond me. This code also won't be applied cumulatively - so they'll owe me money. If it wasn't so close to the end of the tax year I'd be jumping up and down but it's too much effort to get it reissued yet again. This year I will be doing my tax return early!
Now fortunately I'm switched on enough to know that they shouldn't give me this tax code but many people just accept what they're given - and don't complete a self assessment return so never get the tax back. When I was in an SME I reviewed all the employees' tax codes and found a few on completely wrong tax codes who had been overpaying for years.
Daylight robbery!
.
My wife has had a 2L come in for £25 she earned from a one off lecture she gave 2 years ago. I am just going to ignore it!
Ignore tax codes?
The last post made me wonder if there would be any implications for an employer who chooses to ignore and hence not implement a change of tax code notice for an employee where both parties are certain that the new tax code is incorrect?
If I were the employer of the OP and I received a notification of K15718 for an employee, surely I would have a duty of care to query the code? Meanwhile, if time was pressing for a payroll run and the new tax code were ignored, could HMRC take any action later for lost revenue, say if the new tax code was non-cumulative?
My employees have just had a tax code change (in this case it's in their favour, effective from this month) and when I queried it with HMRC, they said they couldn't discuss it with me - it was down to my employees to bring it up with them if they had any concerns, and I just had to action it. In the case of a massive disadvantageous swing like that of the OP, I guess the most I could do as an employer would be to mention the change to my employee in case they were somehow unaware of it and recommend that they contact HMRC forthwith for an explanation, but I can't find any evidence suggesting I'd actually have a duty of care to do so.
Coding error the other way round
One of my clients, who has a salary of around £40k, was given a tax code of 9350T as HMRC assumed £93,500.of gift aid!
As I don't do the payroll, this meant that at the year end the client, who thought they were on PAYE, had an unexpected £6k tax bill.
@Alf
would it really have been that unexpected? He must have had a coding notice and thought something was amiss surely?
Gift Aid Horse in the mouth!
I have to agree with @alf on that, surely the client on £40K would have noticed that suddenly he got all his tax back he had paid so far in the year and nothing was deducted from his salary.
While I agree that HMRC should have some credibility checks on the coding in this scenario the client does bear some responsibility IMO.
How about K72424
Yes, £72,000 coded against an annual occupational pension of £1,312 per annum
I just had a K1652 against £7000 of PAYE. The phone operator seemed to suggest they had allocated the dividend income against it......... Which suggests there is a probably with the rules in the codes that have been set up this year.
No-wonder they dont want to send them to us any more!