K codes: regulatory limits

[Leftie]

HMRC have upped my tax code again to K466 from K229 to recover my BiK from my company cars.

Thing is, they are never going to recover this tax as I don't pay myself enough through company PAYE and each year the code goes up and up. I wanted to just send them a cheque for the money I owed but they insist on collecting it via PAYE. If I increae my pay to earn enough to pay off this tax, with share dividends it will push me into the 40% bracket which I have done everything to avoid doing.

It occurred to me that as I don't actually need the wage from the company as I live off dividends in the main, I could simply pay my wage each month to the tax man and clear my outstanding tax but the PAYE calculator applies an upper seal (regulatory limit) which prevents me doing it quickly enough. If this is designed to protect the employee, can I just ignore it and pay my whole wage each month to HMRC until the tax is cleared or is there a 'law' that says I can't do that?

Bottom line: if I do will they just get miffed or get legal?

Bizarre world where you can't pay the tax you owe without abusing the system!

[Nicholas Blair]

I would override it and pay what tax you want. It's really designed to help those with a whopping bill and not penalise them too much.

They won't look at it again until the year end anyway (from experience) or until you change circumstances and inform them.

[2 sMoKiN bArReLs]

Share dividends aren't usually taxed at 40%, but 32.5% of the divi value grossed up by notional 10% tax. i.e. the most you pay is 25% of the dividend received.

Edited by 2 sMoKiN bArReLs on Thursday 31st August 18:21

[2 sMoKiN bArReLs]

The K code is restricted in any event to 50% of your pay. It is simply a mechanism of collecting the tax, and does not in the end make any difference to the tax you pay.

[Leftie]

2 sMoKiN bArReLs said:

The K code is restricted in any event to 50% of your pay. It is simply a mechanism of collecting the tax, and does not in the end make any difference to the tax you pay.

I think I will just pay my wages to HMRC until the bill is cleared then slip back to what I normally do, then by year end it will al look hunky dory. I was just a bit worried HMRC would have some rule requiring me to be dangled by my gonads in public for doing such a thing as giving them the money i owe them.