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Sam
Sam, Accountant
Category: Tax
Satisfied Customers: 13915
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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I have received a tax code notification which states my

Resolved Question:

hi, I have received a tax code notification which states my tax code has reduced from 1077L to 149L. There was an underpayment of £295 last yearand on the notice there is an underpayment restriction of £1476 to reflect this and an adjustment to rate bands of £8200. I have a police pension of £18,000 and a job salary of £30,500. There has been no change in this for the same period last year. My whole tax code is applied to my pension. I do not understand why there is such a dramatic change to the tax code. I have spoken to HMCR who were most unhelpful and said they would send a detailed letter to me. They wouldn't explain why I would be paying extra this year except that I was under the 40% bracket last year, however my pension has only gone up marginally and I have had no pay rise. Thanks
Submitted: 1 year ago.
Category: Tax
Expert:  Sam replied 1 year ago.
Hi Thanks for your question I am Sam and I am one of the UK tax experts here on Just Answer. Could you advise how the code 149L is made up from - ? Is this tax code from 2015/2016 OR 2016/2017?So what allowances have been awarded and what deductions from those awarded allowances. U should advsie that your combined income will see you in part liable to 40% tax and this may be where the restriction to your code has come about But if you could provide the information requested - I can assist further ThanksSam
Customer: replied 1 year ago.
Hi the tax code is 2016-2017.
It was worked out as follows;
Personal allowance £11000
Professional subscriptions £196
Total £11196
Less Taxable expenses payments £25
Less adjustable rate bands £8200
Less underpayment restriction £1476
Total tax free amount £1495Tax code of £1495 for my pension 149L
Tax relief of £0 fro my salary with a code of BR
Expert:  Sam replied 1 year ago.
Hi Thanks for your response it is as I thought - your combined income takes you into the 40% tax band As we have the first £11,000 tax free then the next £32000 is liable at 20% and then anything above £43,000 at 40% (up until £150,000)Your total income for the year will be your salary and pension £30,500 and £18,000 - which creates a total of £48500 which is £5,500 over the 20% rate band (plus the small amount to deduct for professional subscriptions) But HMRC had two choices with this1) Charge all the pension at 40% which would be too excessive as only £5.500 is liable at 40% OR20 make an adjustment against your tax free allowances to take into account this position soif £5500 had to collect 40% tax this would mean you had to pay £2200 (rather than just the £1100 that would have been collected. So your code has to be adjusted to make sure just £5500 at 40% (£2200) is taken into account- however they have made too small an adjustment - as £8200 will only collect (x 20%) = £1640They need to increase the adjustable rate band to £11000 (x 20%) = £2200I would go back to HMRC and ask for the correct adjustment to be made for your income Let me know if I can assist further Thanks Sam The reason the officer would/could not explain this to you is that they didn't know how to - so they offered you a written explanation to be posted to you instead.
Customer: replied 1 year ago.
Thanks fro your answer, why was this not the same last year?
Expert:  Sam replied 1 year ago.
Hi I cannot comment on that - only HMRC can but I fear you may find that you owe HMRC money due to the fact you may also have been in the 40% tax band last year too. Let me know if I can assist further but if you could be so kind as to rate me for the level of service I have provided (or click accept) it would be appreciated, as then Just Answer credit me for my time Thanks Sam
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