Bankruptcy tax code query

[diwallis]

Hi my boyfriend declared himself bankrupt on the 8th Sept 09, he received a letter several months ago to say the OR had finished with him, he is currently still on a BR tax code and we were hoping after the first year had passed and he got his 1yr discharge that his tax code may drop to a 'normal' one? Anyone know anything about this? Thanks

[sherrardk]

Is his tax code part of his 'paying back debt'? If so, I thought that this went on for 3 years from bankruptcy regardless of when you are discharged.

[themas]

I don't understand this. The procedure is that, if he was working & paying tax when he went bankrupt the OR would arrange for him to have a nil tax coding for the tax year in which he went bankrupt (ie 2009-10). What then happens is that his pay is received without any tax being deducted & he has to hand over to the OR each month the amount of tax he would have paid. (In my view this is a ham fisted & daft way of doing things, but nonetheless it is the procedure.) At the end of the tax year in which he became bankrupt the tax code should revert to his normal one. If it doesn't, this needs to be taken up with his tax office.

Your post says none of this has happened - & that he's been paying too much tax because of being on a BR code. That is wrong - no way should he be paying more tax than normal because of the bankruptcy. Unless there is something else in his circumstances which has caused the BR code to be used (which he may be able to find out from his employer or tax office) he should ask the OR's office about it.

[diwallis]

Thank you both, he was self employed prior to bankruptcy, so paying tax. When he went bankrupt the OR never discussed or arranged anything to do with paying tax back to them or him going on a nil code. On his first wage slip after Bankruptcy we noticed the code had changed and assumed it was their way of claiming some of the 'debt' back, was hoping that after year 1 it would revert to a 'normal' code. Will get him to contact the OR office, wont hold out much hope though as they haven't been much help so far! Thanks for taking the time to reply.

[themas]

If he was self-employed he wouldn't have a tax code, so I assume he started employment with an employer about the time he went bankrupt. If so, it could be that the BR code is just because the employer had no actual code they could allocate to him. However, this should have been sorted out with the Tax Office.

If I am right, this is nothing to do with the bankruptcy - he should talk to his employer's pay office about it.

[diwallis]

Themas - he started working for them in June and had a 'normal' code, then went BR in sept and then the code changed, have called the OR yesterday but as of yet have not got back to me! Not surprised they haven't been any help since this all started! Will tell my boyfriend to talk to work and see what they say, thanks for your help!