Tax Codes

[MisterTommyH]

If anyone understands tax codes, and would be willing to give some advice can you please let me know?

Nothing bad, just every year they change my tax code, every year they say I've underpaid, and every year they change it again to collect what I've supposedly underpaid.

This despite earning exactly the same and having exactly the same benefits (a £137 professional subscription).

Surely, as they know what I earn, will earn, what my benefits have and will be (I.e, no change at all), they could just give me a tax code to sort it all out by next April, then the correct tax code full stop.

Are they really incapable of giving me the correct tax code each year for known earnings and benefits, or am I being screwed?

(And please don't answer if you're just going to say that the taxman will always screw you - I'm looking for an answer to let me know whether I need to do something about this or not).

Thanks.

[tigersaw]

do you fill in a tax return?

[MisterTommyH]

PAYE, all done by the company, P11d too.

Always has the same wage (at least for the last few years, always has the same subscription (which isn't technically a benefits, by regardless is in the same place on the form each year)).

No car, no overtime.

[tigersaw]

My tax code changes about 3 times per year.
I get one before the new tax year, then I write to them in August/september and tell them everything I earned last year and get another one, then towards the end of the year it changes again.
I think its all a big catching up exercise since the tax bands keep changing every budget.

PMed

[rockster]

Professional subscription will be an expense, not a benefit. If there's anything listed on your P11d that's not in your tax code it's probably this that's causing the underpayment. You can have an adjustment made to the tax code to include this benefit.

[MisterTommyH]

Cheers Dave, I'll reply when I have access to the stuff.

In any case, the underpayment seems to be more than the total cost of the benefit/expense so it can just be that....

Tried to explain last year that it was an expense and they wouldn't have it.... So let it go in the end...... This is the same thing three years running.......

Have a funny feeling that I'm being penalised for an overpayment 4 years ago.

[Sir Trev]

Originally Posted by rockster

Professional subscription will be an expense, not a benefit. .

Not always so. If the company pays it on your behalf it is strictly a BIK. However if it is a requirement of you being employed then it can be treated as a business expense and will not be on your P11d. As a member of an accoutancy body I normally put my CIMA fellowship subs through expenses - if I'm in a role that does not require such a qualification I get hit on my P11d. I'm now in a project management role so I have a feeling I'll get whacked for it again.

As to tax codes constantly playing catch up, this is perfectly normal. Until HMRC know how much benefit you've had they don't know how much tax to apply. At Dell I had a fuel card - HMRC have no idea how much fuel I was going to get through so had no idea how much tax to apply to my coding notice until the P11d for the previous year was submitted by my employer.

[PyroUK]

An entire department had a barney with HMRC this year as our company swapped the way our tax free benefits worked and a lot of us "underpaid" according to them (we used to get paid more to account for the benefits we had to pay tax on (we had PMI so had to pay tax on that that was equiv to roughly £50 so they added "£50" to our pay so we paid the extra tax) and now its all done in the tax code). They reduced the tax free allowance to take this in to account last August then a lot of us got a new tax code in march in anticipation of the new tax year, however this was wrong.

We called them and they said the new tax code is right at the moment but wouldnt be updated as our employer had to send them our P11d's which would be mid june. However we don't get P11d's any more. Somehow though the codes have been adjusted correctly.

The problem they have is that they work reactively 99% of the time. I would suggest checking with your HR dept (good luck if they are anything like mine) to see how your company benefits are applied. If it is "at source" (i think thats the term) then it should all be done via tax code, if it is not "at source" then your pay should be adjusted to account for the tax that needs to be paid i.e. more of less.

Once you know how it is "meant" to be paid you can contact HMRC and try and get some sense out of them (again good luck depending on who you get through to). They may give you some BS about needing updates for your company etc but you may be able to get this info and pass it on.

Tax codes are a proper 'mare when they are wrong as it seems no one knows what they should be. Hope the above made sense and you can get it sorted!

[rockster]

Originally Posted by Sir Trev

Not always so. If the company pays it on your behalf it is strictly a BIK.

I don't believe there is any way for Professional Subs to appear on a tax coding notice as a deduction - it would be classed as Other. I agree with you on the general taxation treatment but the question was about a PAYE coding notice. Could be wrong though, it's a few years since I worked as a tax adviser.