Tax code change and pension contributions

[PostHeads123]

I started a new job last year where my base is just over the threshold where my personal tax allowance starts reducing, I had been making additional pension contributions via salary to keep myself well under the threshold though and still plan to. I got a letter from HMRC though giving me a new reduced tax code which is based on the fact my employer has told them my base salary (before my pension contributions). How does it work in this situation do I just have to take the reduced tax code and then have to claim any tax back at self assessment time ?

thanks

[Eric Mc]

Phone HMRC and tell them about your pension contributions. There is a contact number on the Coding Notice.

[PostHeads123]

Eric Mc said:

Phone HMRC and tell them about your pension contributions. There is a contact number on the Coding Notice.

I did the person I spoke to was clueless, passed me to SA helpline then cut me will try them again.

[Mikee19]

Your new employer would not have told the HMRC your "base salary". HMRC will be working this out based on your taxable pay to date in your new employment, they will also including the earning in your previous job if they have matched up your records or if you submitted a P45 (showing previous earnings figures) to your new employer when joining.

You can usually see your taxable earnings to date on your payslip and it would be easy for you to add on an estimate of what you will be paid in March to get an idea of your total taxable earning for the year. You can then work out if you will be under the limits.

You may also need to factor in benefits in kind (company cars, health insurance etc.). If you have a P11D with a benefit value this could reduce your personal allowance via your tax code.

It's fairly common that the HMRC don't realise you have left your old employment as they haven't matched up the records so think you have two jobs. Worth calling the HMRC to check this.

I would ask your payroll department for help and double check your new pension is definitely salary sacrifice.

Edited by Mikee19 on Thursday 3rd March 10:38

[PostHeads123]

I got through to someone who seemed to know the score and they modified my tax code based on estimates, thanks everyone.

[Eric Mc]

PostHeads123 said:

I got through to someone who seemed to know the score and they modified my tax code based on estimates, thanks everyone.

Speaking to HMRC pn the phone is a thankless experience and I try to avoid it all costs. However, there are times when one has to bite the bullet. Persistence is a virtue.

[spence1886]

I was in a similar situation a few years ago and recall being able to log in to my personal tax aco and update my expected earnings which triggered a tax code change.

You have to be careful to make sure that you don't screw up your calculations and potentially face a tax bill at the end of the year... ask me how I know...

[Mrr T]

Can I ask any tax expert to confirm HMRC where correct when calculating my tax 2 years ago.

I was in the same position as the poster. Salary took me in to restriction on PA. I always paid sufficient into my company scheme to ensure I got my full PA. My company scheme did not reclaim tax so that was always via my return. HMRC calculator reduced my salary by the VC so no restriction on PA.

When I finished work I would still have lost PA but could not pay into my former company scheme so I paid into a SIPP which did claim 20%. The HMRC calculator this time reduced my PA based on my salary before the VC. The VC was deducted when calculating tax payable. As a result I only got relief on the VC at 40% and still paid 20% on the PA reduction.

Is this correct?