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Sam
Sam, Accountant
Category: Tax
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I have a pension of £20,181.96 per year plus a state pension

Resolved Question:

I have a pension of £20,181.96 per year plus a state pension of £7190.56
I am over 75 for tax allowances and qualify for the married tax allowance.
For tax year 2014--2015 1was given a code of first 683T then 755T then today I find it is 688T without any notification. The tax office say they keep finding discrepancies in my income, but it never changes. I have no other taxable income.
Please what should my tax code be
Submitted: 3 years ago.
Category: Tax
Expert:  Sam replied 3 years ago.
Hi
Thanks for your question- I am Sam and I am one of the UK tax experts here on Just Answer.
Based on what you advise -
Your total income is 27371 a year
For the personal allowance for someone born before 6/04/1938 the income limit is £27000, and the married couples allowance is £8165 so this will see you needing a reduction, which is applied first on the personal allowances but can be taken down no further than the basic personal allowance, which is £10,000
Your income is £27371 see you having £1 of personal allowance reduced for every £2 its over the limit - so £371 would see £186 reduction in allowances
Age personal allowance for 2014/2015 £10,500 less £186 - should see you entitled to £10314 personal allowance and then full married couples allowance (which is restricted to 10%)
So married couples allowance which is only granted at 10% relief is shown as £4082
So total allowances
Personal allowance £10314
Married couples allowance £4082
Total allowances £14396
Then state pension has to ne included in your tax code, as its an income, that is considered taxable but cannot have tax deducted from it directly.
so Total allowances £14396
Less State pension £7191
Allowances left over £7205
You should therefore be on tax code 720P
Why its gone down to 688P I do not know (unless you have unpaid tax owed from a previous tax year) but I can advise its not your income that's creating the discrepancies, its the officers adjusting your tax code, as you can see how complex it is !
I would ring up HMRC (or write to them) and complain about the frequency of the changes, and ask the complaints officer to review your tax code and get it put right, and to ensure it stays right !
I am bout to meet with clients, so will not be available straight away if you have any follow up questions, but I will respond on my return.
Let me know if you need anything else
Thanks
Sam
Customer: replied 3 years ago.

I believe the personal tax allowance for someone born before April 6th 1938 (which I was) is £10,660 and not £10,500 as stated by you. This will obviously make a difference to the calculation.

Expert:  Sam replied 3 years ago.
Hi John
Thanks for your response
I do apologise - I was using the allowance for those born between 1948 and 1938 - and of course you were born before 1938
The recalculation then is as follows
Your total income is 27371 a year
For the personal allowance for someone born before 6/04/1938 the income limit is £27000, and the married couples allowance is £8165 so this will see you needing a reduction, which is applied first on the personal allowances but can be taken down no further than the basic personal allowance, which is £10,000
Your income is £27371 see you having £1 of personal allowance reduced for every £2 its over the limit - so £371 would see £186 reduction in allowances
Age personal allowance for 2014/2015 £10,660 less £186 - should see you entitled to £10474 personal allowance and then full married couples allowance (which is restricted to 10%)
So married couples allowance which is only granted at 10% relief is shown as £4082
So total allowances
Personal allowance £10474
Married couples allowance £4082
Total allowances £14556
Then state pension has to be included in your tax code, as its an income, that is considered taxable but cannot have tax deducted from it directly.
so Total allowances £145566
Less State pension £7191
Allowances left over £7365
You should therefore be on tax code 736P
But the allowance that HMRC has given you is still much lower then I would expect it to be.
You need to ring them and ask why they have your allowances down as 688T - as this is £485 less allowances then you are due
Again many apologies for the wrong allocation of personal allowances.
Thanks
Sam
Customer: replied 3 years ago.

Thank you very much for your help. Have phoned the tax office who have agreed with your code but are not able to give an explanation of

their previous tax codes! They will hopefully implement 736.

Again thank you.

Expert:  Sam replied 3 years ago.
Hi John
You are very welcome
I think its just the officers who are allocated the coding work, just find the calculations for the age related allowances, when income is in excess of the threshold, too confusing !!
(As you can see as I allocated the wrong personal allowance initially!!!)
But I am glad you have now had the tax code put right, and will benefit from not paying too much tax.
If you could rate the level of service I have provided, it would be appreciated, as this ensures I am credited for my time.
Thanks and have a great week
Thanks
Sam
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