New Tax Code = More Wonga !!

[Borg Warner]

Congratulations gentlemen on your reduction in the amount of tax you pay. Despite my code increasing so too did the amount of tax I pay.

You are therefore spending my money I shall PM you all with my PayPal account so that I can have it back please

My Hippo take a lot to run.

[carlpenn]

Originally Posted by Borg Warner

Congratulations gentlemen on your reduction in the amount of tax you pay. Despite my code increasing so too did the amount of tax I pay.

You are therefore spending my money I shall PM you all with my PayPal account so that I can have it back please

My Hippo take a lot to run.

How did that work out?

If your Tax Code increases, the amount you pay decreases, there is no other waay it works. Unless you do Overtime obviously...

[SapperGB]

my new tax code.....

744L

[GT Courier]

Originally Posted by humphshumphs

Or you could be self employed .... and get a tax bill for all of it in one go (in January ), then they also ask for a 'payment on account' in July which is tax on what you haven't earned yet.

The tax office got a little upset when I asked why I had to pay in advance once, and was told in no uncertain terms... 'Its payment in advance'. I asked why as PAYE was Pay As You Earn and self employed = you give it to us in advance.

Sorry little rant over

That's not true exactly:

Your year end (for self employed) is 05.04.12, you do your tax return for the period 06.04.11 to 05.04.12 (01.04.11 to 31.03.12) by the end of January 31.01.13. When you do this you have to pay 50% in 'advance' (unless the amount of tax is small < £1k) by 31.01.13 and another 50% by 31.07.13 for the tax year 06.04.12 to 05.04.13 (01.04.12 to 31.03.13).

Thus by 31.01.13 when you pay the first 50% in 'advance' you have gone through 9 months of the tax year to which it relates and the second 50% in 'advance' by 31.07.13 you have gone 4 months past the tax year to which it relates.

Of course if your income (Net profit) fluctuates wildly this can cause massive changes, but this can be smoothed by claiming adjustments to the payments on account.

Clear?!

With regard the tax code, it is a common misunderstanding that the tax code is the tax you pay. Not so, the tax code is merely there to smooth the amount of tax you pay.

Everyone is entitled to the same 'tax free' amount (which also can vary depending on age etc)

If your tax code is not 944l (which is the emergency tax code) it means it has been adjusted to smooth your tax payments due to probably other income, taxable benefits/second job etc.

You should always check at the year end that the total amount of tax you have paid is correct even if you are not required to submit a 'self assessment'

If it is wrong you can claim/or pay the difference.

If you find your tax code is not smoothing your tax suitably over the year you can phone the HMRC (Not fun though) and ask them to change it by explaining your circumstances and income.

They can then write to your employers to amend the tax code.

Note that your employer cannot amend the tax code unless instructed by the HMRC unless it is to the emergency tax code (944L) over a tax year end (Where you were previously on the emergency code)

Obviously there are loads of caveats and exceptions which would take up too much space.