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'Negative selling' (aka 'guilty until you appeal) from Inland revenue ..

I just viewed a tax coding letter to someone who'd turned 65 (not me, not quite yet) and it basically went 'pension from state £5.1k, other income £150, personal allowance for someone aged 65, with income over £24.5k, £5k .. thus we'll be sending a negative £250 tax code to your company pension scheme so they can deduct the extra tax.'

At that point I went 'whoa, so how much company pension do you get then?' .. answer £5k (well known to the inland revenue). 'How much interest income?' £3k .. also known to IR. (At least a couple of years ago when this person last filled in a self assessment tax form).

'So the basic personal allowance, for someone with £13.25k total income is what?', I asks the IR .. '£7.6k they reply'. So why do they send out a tax code assuming someone is getting enough above the income limit to completely wipe out the old person's personal allowance increase (even when they have enough recent tax returns to know it ain't so) .. 'negative selling' .. or basically 'guilty until proven innocent'.

I wonder how many 65+ year old dears are getting ripped off on the personal allowance because they never read all the footnotes in the coding letter, or because they didn't understand they were entitled to more??

Reply to
GSV Three Minds in a Can
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For the simpletons amongst us please elucidate. Where was the Mistake?

Reply to
Stickems.

Bitstring , from the wonderful person Stickems. said

See, I told you it was sneaky - you obviously don't understand the rules either. Your tax free band goes up from £5k to about £7.5k (numbers all rounded) when you reach 65 .. actually for the tax year in which you reach 65. The increases is reduced by £1 for every £2 you earn over the threshold, currently set at about £19k

The mistake was in them =assuming= that the recipient had £24.5k plus of total income, and thus should have their old age related personal allowance reduced until it was the same as the vanilla (person under 65) one.

Whatever next ?... 'we assume you've used all you tax free band on dodgy income from the Channel Islands, so we're starting you off at a flat 22%'?

Reply to
GSV Three Minds in a Can

The PAYE system should be able to cope with this without the IR having to guess your income. All it'd need is a letter in the tax code to denote entitlement to the age allowance, and then a tax code based on the full age allowance. The letter would signal to the PAYE system to insert a 33% tax band between about 19k and

24.5k.
Reply to
Andy Pandy

Bitstring , from the wonderful person Andy Pandy said

Except it also applies to unearned (non PAYE) income .. dividend income and interest for instance...

Reply to
GSV Three Minds in a Can

Non PAYE income is always a problem - you'd have to fiddle the tax code or claim a refund/pay extra at the end of the tax year in the same way as people whose top tax rate is 10% or 40%.

Reply to
Andy Pandy

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