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HMRC BR TaxCode query

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    HMRC BR TaxCode query

    I am just sorting my Sage instant accounts out and entering details for this financial year.

    The letter I got from HMRC in january says my taxcode for 2010/11 should now be BR

    Most of my income is from dividends and I do a gross PAYE income of around £15k.

    Does this tax code mean HMRC wants me to pay 20% Basic rate of all income for 2010/11 without any personal allowance taken into consderation or am i missing something here?

    This question is based on something I read on ir35calc below


    Tax code BR

    Stands for “Basic Rate” and indicates that all of your income is to be subjected to the basic rate of tax at the current rate. You will therefore receive no personal allowances but you will not be subjected to higher rates of tax.

    A BR tax code is often issued to a consultant who sets up his own limited company, having just left a previous employment.

    This is because HMRC may believe that the new company is a second source of income prior to your form P45 filtering through the system, indicating that you have left the previous employment. As soon as HMRC realise that the new limited company is your only source of income, they will usually issue an appropriate “L” tax code as above. A letter from your accountant to the Payroll Inspector for the new limited company can often speed up this process.

    #2
    A basic rate tax code should only usually be applied if you have 2 different sources of income - I wasn't sure from your post whether you draw part PAYE and part dividends from your own Ltd Co or whether you have 2 different employments
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      #3
      Originally posted by LisaContractorUmbrella View Post
      A basic rate tax code should only usually be applied if you have 2 different sources of income - I wasn't sure from your post whether you draw part PAYE and part dividends from your own Ltd Co or whether you have 2 different employments
      1 job drawing PAYE + divs.

      Ive just spoken to HMRC and they confirmed they did sent me the wrong tax code BR in Jan but they did later send me a correct one

      css_jay99

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        #4
        There have been lots of errors from HMRC re coding notices. Always worth checking them.

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          #5
          Originally posted by css_jay99 View Post
          1 job drawing PAYE + divs.

          Ive just spoken to HMRC and they confirmed they did sent me the wrong tax code BR in Jan but they did later send me a correct one

          css_jay99
          Good news! HMR&C have been known to make the odd error
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            #6
            Indeed. Main income source should have a proper tax code, others can have BRs meaning tax paid on all income as allowance taken care off in main one. Summit wrong to get BR if only have 1 income source.
            bloggoth

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