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TheCountOfNowhere

Just Been Hit With A Big Negative Tax Code...

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Just got a new tax code in, negative one. Had one before so no big deal.

Had a look at this new one and it's a shocker. K1790.

This means my tax home pay is dropping something like 1500 quid a month !!!!!

Surely this is a mistake, what is going on.

Maybe they are trying to tax me on my STR fun, buy the interest rate has dropped to next to nothing.

I'll call them monday and see what they say but I dont think Ill get any joy out of them.

Funny thing is, they sent me a tax rebate on Friday !!!!

Confused, tune in next week....

Edited by TheCountOfNowhere

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It sounds odd if you've just had a rebate.

As you say, give them a ring on monday. I always phone rather than write, they are usually very helpful and if there's an error, they'll amend your tax code immediately.

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This tax code means that HMRC are expecting you to receive approx £22k non-PAYE income (bank interest, stock dividends, self-employed or personal business) over the next year(£17.9k + your basic tax free allowances).

It's possible that you told them about a big gain in the last year, which they have carried over next year.

This happened with me - I once did a job, which brought with it a very large amount of private income. I duly declared it in a letter to the tax office as a one-off source of income. However, I then changed jobs and this income stream disappeared. I didn't think to check my tax affairs for the next couple of years, as I was PAYE-only - but when I did, I found that the IR (as it was then) had simply assumed this income stream had continued for the next 2 years. When I pointed out that it hadn't, I got a huge rebate.

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Could be the interest but as you pay 23% (or whatever it is ) at source then that wouldnt make sense.

Maybe they are trying to collect tax up front as they are running short.

I'll call them and write to them to check my tax code and explain it to me as it's left me a bit short.

I'll point out the interest rate is 0.5 % so they should base this years calculation on interest on that.

It's this coininciding with a tax rebate that is weird.

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Could be the interest but as you pay 23% (or whatever it is ) at source then that wouldnt make sense.

Maybe they are trying to collect tax up front as they are running short.

I'll call them and write to them to check my tax code and explain it to me as it's left me a bit short.

I'll point out the interest rate is 0.5 % so they should base this years calculation on interest on that.

It's this coininciding with a tax rebate that is weird.

I wouldn't call and write, one or the other. In my experience, they will almost certainly sort it out on the phone. If they sort it out and issue a correct code number, the last thing you want is for your letter to arrive a few days later and confuse the issue.

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If they are adjusting your code number to collect possible interest on your savings, they will probably reverse this and leave it until you file you tax return if you prefer to pay it as a lump sum in arrears, at least they were happy to do this for me.

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Guest absolutezero

Don't banks automatically take the interest off before crediting your account anyway?

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Guest absolutezero
Only basic rate.

Ha!

I've never earned enough to get into the supertax bracket. :lol:

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Had a look at this new one and it's a shocker. K1790.

This means my tax home pay is dropping something like 1500 quid a month !!!!!

Won't 1790 be a YEAR rather than a month?

And isn't a tax code an income tax allowance rather than an amount... so if your code is 6500 it means you can earn 6500 before you start paying tax. How does a negative tax code work? Surely it means you pay 20% of 1790 up front?

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Won't 1790 be a YEAR rather than a month?

And isn't a tax code an income tax allowance rather than an amount... so if your code is 6500 it means you can earn 6500 before you start paying tax. How does a negative tax code work? Surely it means you pay 20% of 1790 up front?

The 1790 needs to be multiplied by 10.

The normal tax code is an 'L' code - this tells you your allowances. E.g. if you have £5k of tax allowances, your code is L500. Let's say you earn £30k - then the tax code tells your employer only to deduct tax for £25k (£30k - 500x10).

If you then got £3k of profit from a home-run business - HMRC would adjust your tax code to L200. Your employer would then deduct tax for £28k.

What happens if you earn £30k PAYE, but then make £20k from selling on ebay. When you declare it, HMRC might give you a 'K' code - this tells your employer to deduct more tax. Assuming you get £5k in tax allowances, the £20k extra income would use up all the allowances and more - so you'd get a code of K1500. Your employer would then deduct tax as if your taxable earnings were £45k.

In other words, this tax code implies that you have about £22-23k of extra income which needs to be taxed - and at higher rate tax this could easily be over £1k per month.

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Should have arrived Monday but the damn posties were striking again :)

I had the same problem last week. Turned out to be related to a new computer system they've just put in. According to our payroll department there have ben a lot of errors at our place this month. In my case I just called up the tax office and they sorted it out in 5 mins.

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I had the same problem last week. Turned out to be related to a new computer system they've just put in. According to our payroll department there have ben a lot of errors at our place this month. In my case I just called up the tax office and they sorted it out in 5 mins.

Sorry - should have made clear that was an answer to the OP, not the last post.

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