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Tax Code
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I'm struggling to understand my tax code for the next year. If it's changed from 814L to 770L, is that better or worse? I have to pay a smallish amount of additional tax, but that doesn't seem to equate with what seems like quite a large change in code.
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For more on marking an answer as the "Best Answer", please visit our FAQ.The standard tax code is 1257L which means that the first £12570 of income is tax free. The fact that yours is 814L (£8140) going to 770L (£7700) implies that they are collecting past tax underpayments via the tax code. Generally for non K codes just replace the last letter with a zero and that is your tax free allowance.
I haven't underpaid tax. My HMRC page says that I paid the right amount last year. The only differences other than pension payments, are that I now Gift Aid a larger amount each year than the last time they had a tax return, and that my royalty payments have dropped to almost nothing as my various A level revision guides are now out of print. But as they don't want a tax return, they won't know either of those facts.
I'm the first to admit I find thus complicated but I do know that having a code lower than the standard 1257L does not mean they are grabbing back unpaid tax, I am in a similar position, it means you are getting pension and other income all at the same time. For instance if you get the state pension (let's say 9K a year as an example) while you are working that is taken off the 12750 free allowance and brings the tax free number down to 375L.
That's true, kuiperbelt, I'm absolutely not belittling that, I'll be very grateful for it. But I would question the point of adding 25p per week just for reaching 80, I'd be happy not to have it if I knew it would be going somewhere worthwhile in every case. As it is I'll save it and wait for DEC's next appeal.