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TonyTax
TonyTax, Tax Consultant
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I retired from the police in 2007. I have been in receipt of

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I retired from the police in 2007. I have been in receipt of a pension from this force since then. I went on to work for another police force and am still employed by them. Every penny I have ever earned has been transparent and PAYE. But virtually every year, I am informed by HMCR that I have underpaid my tax. I have just finished paying off £152 a month over the last 3 years (£5,472). I am still paying back a further £90 a month ( over 3 years, 18 months to go ((£3,240)). And I have just been informed by them that I have underpaid this financial year by a further £2,000. They inform me to do nothing as they will take out monthly over 12 months starting April 2015.
My question is: how can they keep getting my tax so wrong?
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.

Hi.

In order to stop underpayments accruing throughout a tax year, you really need to make sure that the tax codes being operated against your pension and your salary are correct before the start of the tax year on 6 April.

If a tax code is amended part way through a tax year and the new code will take more tax, then it will probably be issued on a Month 1 basis so that any underpayment accrued since 6 April will be picked up at the end of the tax year. This is to avoid undue hardship being cause by a substantial underpayment being collected out of one month's salary or pension.

As your police pension will be paid to you for the rest of your life, it makes sense that your personal allowances are used against that source of income. Your personal allowance is age dependent and you can find the current rates here.

Assuming your police pension is more than your personal allowance, then any other income you have will be taxable in full. If your total income for the current year will be £41,865 or less, then your salary should have a BR tax code operated against it (basic rate 20%). If your total income for 2014//15 will be more than £41,865 then part of your salary will be taxed at 20% and part at 40%. It can be difficult to get the right code sometimes, especially where unpredictable overtime is worked and that takes the total income above £41,865.

You should always check your tax codes and not assume they must be right as most people do, in my experience. If you haven't received new tax code notifications before the start of the new tax year, call the tax office and have them reissued to yourself, your pension payer and your employer and then contact the pension payer and the employer to make sure they operate them.

For now, I suggest you call the tax office on the number here and ask them to review your tax codes based on your projected pension and salary for 2014/15 and have them amended if necessary. The tax office will do this while you are on the phone to them. It is a very straightforward process. Ultimately, every individual is responsible for ensuring their own tax affairs are in order, nobody else's. It is very difficult to prove a valid ESC A19 claim and most people's claims fail, simply because they don't have a valid claim.

There is information on tax codings here.

I hope this helps but let me know if you have any further questions.

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