Help With Notice of Coding Breakdown

[ads1980]

Afternoon all,

I completed my SA tax return just before Christmas and it showed that I owed £537 in underpaid tax which was fine. I have received my Notice Of Coding today and I am a bit stuck with it. It is advising that my tax code for 2012-13 is K603 and the workings out are as follows......

Your Personal Allowance £8105

loan from employer -£2827

Savings Income taxable at higher rate -£8635

Underpayment Restriction - £2687 -£14149



tax is due on -£6044



I know its difficult to give me any figures as you dont have a copy of my return but I am certain I dont owe £6044 in unpaid tex.

I am going to phone HMRC but would like some idea of this before I speak to them.

Any help would be aprreciated

[Clare@InTouch]

The loan from employer would relate to a beneficial loan declared on your P11D, so check the value matches there.

Savings income at higher rates is due to dividends most likely. If you complete a tax return each year just ask HMRC to remove this, as any liability will be paid on the return.

In order to recover underpaid tax through your code the code itself has to be adjusted to remove tax relief, not the actual amount due. Withdrawing tax relief of £6,044 means you'll pay tax on that at 20% = £1,208.80. It still doesn't match, so maybe there's more brought forward? Or a payment on account to consider?

[ads1980]

Thanks Clare,

Yes in the description it does say 3 - Savings Income - that is interest from banks or building societies etc or company dividends - is usually taxed before it is paid to you (tax at 20% on interest and 10% on dividends). As you will be paying some of your tax at 40%, extra tax will be due on your savings income. Making this adjustment to your tax free amount collects the extra income. You can make this payment directly if you prefer; if so, please contact us.


So I can ask them to remove this completely?

[ads1980]

And also, I have just checked my P11D and it has the box ticked which advises -

No expenses payments or benefits of the type to be returned on forms P11D have been or will be provided for the
year ended 5 April 2011. For this reason no forms P11D are attached.

[Clare@InTouch]

And also, I have just checked my P11D and it has the box ticked which advises -

No expenses payments or benefits of the type to be returned on forms P11D have been or will be provided for the
year ended 5 April 2011. For this reason no forms P11D are attached.

Ask them to remove the savings income adjustment, unless you'd rather pay a bit more tax through PAYE than on your tax return. It depends if you think your dividends will be higher rate in 2011/12.

The loan may have been an adjustment brought forward from last year. Did you have a loan in 2009/10? Is there anything on your tax return (it would be in the Employment pages)?

[ads1980]

I dont think my dividends will be higher rate in 2011-12. So I should ask for that to be taken off then?

I have checked back on my tax return from 2009-10 and I did have a loan of 2081.00. This was from an Isle of Man scheme which I stopped in early 2010.

[Clare@InTouch]

I dont think my dividends will be higher rate in 2011-12. So I should ask for that to be taken off then?

I have checked back on my tax return from 2009-10 and I did have a loan of 2081.00. This was from an Isle of Man scheme which I stopped in early 2010.

I would request the dividend adjustment is removed, and just ask them to justify what the loan adjustment is. If it's brought forward and shouldn't be there, just ask them to remove it.