Tax guru's?

[Muffster]

Has anyone out there got a good knowledge of tax codes?
I ask because I've just been put onto a K tax code and now my tax free amount is now negative! After being in the forces for years i don't understand tax codes and how they are relevant, it's like black magic to a thick ex-matelot like me.
Please can someone enlighten me.

Thanks.

[Muffster]

Ok folks thanks for the information, i understand that to a certain extent.
Some background: I left the forces last year and started getting a military pension. I had 12 months or so off and now i'm 3 months into a new job, salary, car allowance + fuel card. So yes HMRC will be looking at it all. Alarm bells rung when i got a statement about my monthly pension which now has a sizeable chunk taken out as income tax. The amount doesn't relate to being a 40% or 20% taxpayer.
Also had a letter from HMRC about how we work out your tax code. It has amounts about job expenses and 'less adjustment to rate bands' none of which make any sense or relate to the salary i'm getting or car allowance amounts. The letter says i owe the £369, fair enough but will i continue to be on a K code until that amount is recovered or until the next tax year and in the meantime have the sizeable chunk taken out of my pension??

I will of course call out friendly HMRC but in the past the left me total confused when i 'owed' them regarding a mileage expenses form. I digress here but two different advisers told me, and i quote, 'Just re-submit the paperwork Sir and change the figures if you get what i mean, then we can make this go away' Eh, really!!
So i hope you can appreciate i'm reluctant to call them until I've got a grip of whats going on.
Therefore all info i can gather is muchly appreciated.

Double six: Unfortunately mate i 'aint earning over £122000, not even close.

Sorry it a bit long winded.

Thanks.

[Muffster]

Hainey said:

Muffler, I'm ex Navy as well and have a pension income from service. Eric nailed it I think.

It doesn't take much of a civvy job at all to push you into the higher tax bracket and when you put fuel cards and company cars into the mix, it can be quite a clobbering.

Up to you to decide if it's worth it. I now employ ex forces guys on pensions and all of them don't take the fuel card or the company car, they take the car allowance instead. It's still taxable at 40% but seems to work out cheaper than taking the Audi!

Hi Mate, thanks for the reply. Yes i think you're right about Eric's comment.
I take the company car allowance and the fuel card. What would be the alternative to not having a fuel card? If i paid for the fuel myself it would cost me a fortune! It is difficult to understand it all especially after being PAYE for so long, i hope that the bite that the taxman just took out of my pension will not be a monthly occurrence.

Cheers.

[Muffster]

Ok, so i'm beginning to think it's to do with having a fuel card. Although i do very little personal mileage, literally a few miles a week, it's all recorded via mileage capture.
The company has us on some scheme where we get the equivalent monetary value of a the 45p/10000 miles for running our own car paid direct to monthly salary rather than submitting a business mileage form to HMRC.
I wonder if this is where the issue is.

If so, can i get around it by giving the fuel car back, paying for the fuel myself and claiming it via through expenses?

Thanks.

[Muffster]

Hi mate thanks for the post there.
That could be the case but I have only been in the job for less than 3 months so how has the tax man come to the conclusion that i will do 'x' miles a year and have £x's a year fuel spend per year and therefore i end up on a K code?

Thanks.

[Muffster]

Yes i will definitely call the tax office, i wanted to try and educate myself a bit more before i do so.
Will also speak to the pension provider and payroll back in the office.
I use an accountant to do my return and will speak to him as well but of course there will be a charge for him to look at it so again i want to know what i'm talking about.

Thanks again.

[Muffster]

Very true mate.
Had a call from my friendly HR dept today. Apparently from today i'm now on a DO code which is 'worse' Great!
So, called HMRC and they were very helpful and i shouldn't be on either a K or DO code. (so why do they do it?!) Although i still don't fully understand how my car/mileage/fuel car effects my salary & tax.

They had come to the conclusion that my allowances were in the negative so i owed the tax man before i get out of bed. It seems that HMRC do a lot of estimating and guess work when working out how much they might tax you. Useful!

Anyway, i appreciate the comments above.

Thanks.

[Muffster]

shep1001 said:

Should show how they arrive at it on your tax code notice? I think you can even look this up on line. I just had a K code where due to an internal operating division transfer; my company car BIK was counted twice (13k!) and they threw in 2 lots of fuel card too which I don't have, something to do with the wording of reimbursing fuel & buying back private miles & the HMRC monkey not reading the form properly.

I almost gave birth when I opened the letter but give HMRC their due, less than 1 minute on hold and the bloke I spoke to was on the ball & had it corrected but still took a hit on this months wages though

Sounds like a similar situation.
So, will you expect to pay less tax when you get paid again and therefore recover it in a certain way? is that how it works.

I've been paid 3 times since starting with the new company. Got the same gross amounts for salary and company car allowance. But....paid 3 different amounts of tax, 3 different amounts of NI and 3 different net amounts.

[Muffster]

oop north said:

And make lots of mistakes! I remember one year where there were around six entries on the calculation of the tax code notice sent to me, five of which were incorrect...

It make my blood boil even more when earlier on this year the former head of HMRC (who previously had 2 shockingly piss poor appointments at the Immigration Service and then the Border Agency) was shuffled of elsewhere with a Damehood. Yet the small man on the street is having his pants pulled down. It's disgraceful.