Tax coding notice

[Gio G]

Hi all,

The Mrs received a coding notice today and noticed that her personal allowance (tax free amount) was zero. Is this just a cock up by HMRC? as I cannot see why she would have no tax free personal allowance, as she has always had it.

Thanks G

[Eric Mc]

What are her circumstances?

Does she have another source of income which is taxed under PAYE (a pension or another employment, for instance)?

Is she a Higher Rate Taxpayer?

Does she have to pay back Child Benefit?

Does she have significant Benefits in Kind?

Is she repaying a Student Loan?

Did she pay the correct tax for tax year 2014/15 or even 2013/14?

[Gio G]

Eric Mc said:

What are her circumstances?

Does she have another source of income which is taxed under PAYE (a pension or another employment, for instance)? No

Is she a Higher Rate Taxpayer? Yes

Does she have to pay back Child Benefit? No

Does she have significant Benefits in Kind? No

Is she repaying a Student Loan? No

Did she pay the correct tax for tax year 2014/15 or even 2013/14?

Yes

Nothing has changed in her circumstances to suggest a change...

[jw673]

Gio G said:

Nothing has changed in her circumstances to suggest a change...

Did she earn over, or near, £100k in the last tax year? HMRC may have "helpfully" assumed she'll earn >£120k, and if she doesn't - she'll get the overpaid tax after she submits her next tax return. She should call them to clarify their reasoning.

[Eric Mc]

Gio G said:

Yes

Nothing has changed in her circumstances to suggest a change...

I asked seven questions. You answered "yes" to them all?

[Gio G]

jw673 said:

Did she earn over, or near, £100k in the last tax year? HMRC may have "helpfully" assumed she'll earn >£120k, and if she doesn't - she'll get the overpaid tax after she submits her next tax return. She should call them to clarify their reasoning.

Ok, this may be the key. Thanks G.

[AyBee]

Eric Mc said:

Gio G said:

Yes

Nothing has changed in her circumstances to suggest a change...

I asked seven questions. You answered "yes" to them all?

Look closer - although not clear

[AyBee]

Gio G said:

jw673 said:

Did she earn over, or near, £100k in the last tax year? HMRC may have "helpfully" assumed she'll earn >£120k, and if she doesn't - she'll get the overpaid tax after she submits her next tax return. She should call them to clarify their reasoning.

Ok, this may be the key. Thanks G.

You had to start a thread to tell us all how much your wife earns?

There's a calculation on the back that explains how it's calculated, I suggest you read it next time

[jw673]

AyBee said:

There's a calculation on the back that explains how it's calculated, I suggest you read it next time

Whilst the coding notice may state the assumption of earnings and the tax bands, I don't think (Eric?) it is explicit in stating that the personal allowance is lost from £100k>£120k. So if they're seeing it for the first time, most likely due to her most recent self assessment submission, neither of them are likely to know. HMRC may have included a pamphlet with the coding notice that explains it. See also: Can we talk about £100-120k marginal tax rate.

[Eric Mc]

http://www.hmrc.gov.uk/manuals/pommanual/paye11015...

[Revisitph]

jw673 said:

Whilst the coding notice may state the assumption of earnings and the tax bands, I don't think (Eric?) it is explicit in stating that the personal allowance is lost from £100k>£120k. So if they're seeing it for the first time, most likely due to her most recent self assessment submission, neither of them are likely to know. HMRC may have included a pamphlet with the coding notice that explains it. See also: Can we talk about £100-120k marginal tax rate.

)

My form, and I assume everyone's, since everyone has the potential to have a personal allowance says in Note 1 "If your total income exceeds £100000, your allowance goes down proportionally." It doesn't spell out that it will be zero if you earn more than £120k. However most people in that bracket will have other things e.g. professional subscriptions, gift aid, perhaps pension contributions which will give them some relief which will be included in their code.