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My new tax code is K1323 for my full time employment (previously

Resolved Question:

My new tax code is K1323 for my full time employment (previously K628 for 2014) and for a previous co pension DO which replaced BR for 2014 (previously K628 for 2013)
I do not pay NI contributions but collect a state pendion
My tax in May 2015 has increased by £500.00. I believe I might not be taxed correctly.
Submitted: 2 years ago.
Category: Tax
Expert:  Sam replied 2 years ago.
Hi

Thanks for your question, MY name is XXXXX XXXXX I am one of the UK tax experts here on Just Answer.

The main position for 2014/2015 is that whilst state pension and former employment pensions would have increased, the tax free allowance entitlement for over 65,s did not, as this has led to a higher tax position, than that of the previous tax year.
Plus a reduction of the related allowances due to your income level.

However - if you could advise
1)Your state pension for 2014/2015
2) Your Company pension - annual amount for 2014/2015
Then I can check the tax code position for you
3) Your annual income from employment along with details of any company benefits

Thanks

Sam
Customer: replied 2 years ago.


My state pension in £880.00 apr per month


My co pension for fin year 2014 = £ 2402.76 Tax dedcted £480.40


Annual salary gross £90566.04 tax deducted £31856.40


No NI contributions


Final Tax Code per P60 K628 M1

Expert:  Sam replied 2 years ago.
Hi

Thanks for your response

State pension whilst a taxable income cannot have tax deducted from it directly so automatically has to be included in your tax code, to be covered by tax free allowances.

You advise that your state pension is £880 a month - I assume you mean every 4 weeks (if not do advise and I can then alter the figures) but this amounts to £11440 a year, along with your income of £90566 and former employer pension of £2402 (which would have increased a little so my figures will not be accurate)
This is a combined income of £104408
As your annual income is in excess of £100,000 then this also starts to have an impact on your allowance entitlement - and for every £2 your income is over this threshold, your personal allowances decrease by £1
So you are £4408 in excess which would equate to a reduction of £2204 allowances -
You would be only entitled to £10,000 less £2204 - leaving £7786 - from which state pension would be deducted of £11440 which leaves you at -£3654 this should equate to tax code K365 but you advise its K1323 - so you must have other deductions in your tax code, either company benefits (such as company car or medical benefit or unpaid tax from an earlier tax year) If there are no other deductions then this does need looking at - as I would agree that this tax code is incorrect.

However the code DO against your former pension (40% tax) is correct as you have used all your personal allowances against your state pension, and then all the 20% rate band with your income from employment - so the only income left to consider s the former company pension, which has to be charged at 40%

But the tax code, does not appear right based on the information you have advised me on and you will need to ask HMRC - try ringing them as soon after 8am or as close to 8pm as possible, which will allow you a batter chance of getting trough to talk to someone quickly.


Thanks

Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 13777
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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