Compensation for 10% tax rate aboliton?

[MitchT]

Wasn’t sure where to post this – I figured someone most likely to know would be in the business section…

I received my wage slip yesterday and noticed that my tax code had changed and that I had an extra £60 after tax. I guess this is the compensation that us peasants get for the 10% rate being abolished, but what isn’t clear to me is whether I will get this extra £60 every month or if it’s a one-off. I imagine it’s a one off, but can anyone confirm either way?

[Eric Mc]

The "improvement" to your Net Pay situation works out at £120 for the whole of the tax year 2008/09. This initial adjustment covers the first six months of the tear (backdated from April 2008 through to September 2008). From October 2008 through to the end of March 2009 your Net Pay will be £10 a month better each month.

If you are a higher rate taxpayer you will see no change at all.

You should have personally received from HMRC an updated PAYE Notice of Coding over the past few weeks so you should not have been relying on seeing the effect on your wages pay slip.

Did you not get this amended coding notice then?

[MitchT]

Eric Mc said:

If you are a higher rate taxpayer…

I wish

Eric Mc said:

You should have personally received from HMRC an updated PAYE Notice of Coding over the past few weeks so you should not have been relying on seeing the effect on your wages pay slip.

Did you not get this amended coding notice then?

No, not a sausage.

[Eric Mc]

Does the Revenue have your correct home address?

[V8mate]

I didn't get anything fom HMRC either. Maybe they would have sent it to my accountant?

[mcflurry]

You will get £10 a month extra until the end of the tax year (assuming nothing else changes)

[Eric Mc]

V8mate said:

I didn't get anything fom HMRC either. Maybe they would have sent it to my accountant?

If you have an official "tax agent" (usually an accountant) they will usually (although not always) receive an agent's copy of these amended coding notices. However, you, as the taxpayer directly affected, should also receive your own copy of these amended notices too.

Coding notices are VERY important and all taxpayers under the PAYE system should be aware of their importance and understand the details they show.

[MitchT]

Eric Mc said:

Does the Revenue have your correct home address?

The only place I’ve lived other than my current address was my parents’ place, so they would have got it if I haven’t. How does the IR ‘get’ my new address if I move? Do I have to tell them? When I left my parents place I told my employer, banks, DVLA, car insurance… basically everyone I could think of, but I didn’t tell the IR because it didn’t occur to me and I later figured that between my employer (who pays me a taxable income, my bank (who pays me taxable interest on deposits) and my pension provider, one or more of them would automatically pass the information on given that there was a taxable interest involved. Should I have told the IR myself?

Edited by MitchT on Tuesday 23 September 10:56

[Eric Mc]

One of the major problems with the PAYE system is that the taxpayer becomes separated from the nitty gritty of handling their own tax affairs - and as a result are often not clear who's responsibility it is to notify the Revenue about changes in personal circumstances. The bottom line is that, in the UK, it is ALWAYS the taxpayer's duty to keep the Revenue up to date on their own personal situation.

Under PAYE, employers may very well supply address information to the Revenue in respect of the employees. This would show up -

a) when a new employee joins and part of the P45 handed in by the new employee is submitted by the new employer

b) if the employee doesn't have a P45, the P46 submitted by the employer will contain address information

c) the P60 (the employer's version of tis is called the P14) is submitted to the Revenue each year after 5 April and will also contain employee address details.

It may be worth your while contacting your PAYE tax office to check on what information they have on their files about you. Your employer should be able to tell you the telephone number of your PAYE office as it is the PAYE office that they send all their employee documentation to and they should have all the relevant tax office details on their files.

[andy400]

I had a change of code letter from HMRC, but I'm a higher rate payer.

[Eric Mc]

Your code will have changed. That's true for everyone.

However, not shown on the coding notices is that the point at which you start paying 40% tax has also been reduced by £600.

Coding notices only show Tax Code adjustments. They don't show Tax Band adjustments.

[MitchT]

Interesting stuff, thanks Eric. Incidentally, when my P60 comes each year it has my correct address on, so does that mean the IR have my details right, or should I still check?

[Tuscan Tart]

Because it was a blanket change to anyone on an L code, HMRC did not send out details of the change unless you needed other changes to your tax code.

All employers were notified by letter of the additional 60 increase to tax codes ending in L.

[Eric Mc]

Tuscan Tart said:

Because it was a blanket change to anyone on an L code, HMRC did not send out details of the change unless you needed other changes to your tax code.

All employers were notified by letter of the additional 60 increase to tax codes ending in L.

I handle payrolls for some of my clients and the issuing of amended codings does appear to be rather hit and miss. I've received some coding details (as an employer) but mainly found out about the employee's coding changes because I am often the tax agent for the individual too - and therefore received the Agent's Copy of their personal Notice of the Amended Tax Coding.

I wonder how much this exercise has cost the exchequer - not just the cost of increasing the tax allowance for basic rate tax payers, but the sheer logistics of notifying everyone.

[Eric Mc]

MitchT said:

Interesting stuff, thanks Eric. Incidentally, when my P60 comes each year it has my correct address on, so does that mean the IR have my details right, or should I still check?

Not necessarilly. All it shows is that your employer's records are correct.

There is no harm in contacting the Revenue directly just to be sure.

[mr.man]

One reason why address details may not be up to date is because your employer now files their end of year returns on line and has not updated any employee change of details since first setting up this method.

[Simpo Two]

I suppose the self-emplyed get shafted as usual?