Income Tax Demand

[chrissa1]

I am a pensioner and my only income last year was my State Pension + 3 small pensions which I receive, nett of tax.

I have received a Demand for £262.40. to be paid before 31st Jan 2014.

I rang the Tax Office and have been sent the figures they have for my Pension Income and to my calculations, they don't add up.

Should I pay the lower figure that I have calculated from these figures, or query the fact that all my income is received Nett of tax, being deducted already by my providers? Thanks.

[pixie373]

You definitely need to speak to them, as if they think you've underpaid, you'll be risking a fine as well.

[chrissa1]

The 0845 number I rang and who sent me the figures, couldn't or wouldn't tell me what I owed. If I ring the 0300 number on the "figures letter" be ablt to tell me how I owe this money from already taxed income.

Quite honestly, I haven't got a spare £264.00 to give them.

[ubasses]

I found the tax office to be quite helpful when they messed mine up on retirement. Give the 0300 number a ring, but have everything written down clearly in front of you.
ie Pension 1 £xxx
Pension 2 £xxx
Pension 3 £xxx
State Pens£xxx

Total Pensions £xxxx
less tax allowance

[boxtops]

I agree with ubasses, you need to ring your main tax office (i.e. the one which your main tax allowance is set by. I have found them very helpful since I have multiple sources of income - the one (the largest) has my tax allowance against it, the others are taxed at basic rate. Is this demand definitely for 2012-13, or an earlier year, being as we are still in 2013-14?

[ubasses]

oops that went too soon

Total after tax allowance x 20%

Then add up all tax paid and ask them to explain the difference.

Sorry if I am spelling out what you already know, as I do not know how financially savvy you are.

They should also agree to take the payments monthly (if you do end up owing them) by adjusting your tax code for next financial year.

[boxtops]

.... just seen your later post re not having £264 - they might be able to adjust this or next year's tax code, to repay it that way (but you want to be sure that you owe it before you agree to that!)

[chrissa1]

Yes, it is for 12/13, boxtops.
Thanks, ubasses. I am quite savvy with financial matters but I just thought that when I received the income, it had already been taxed at source. I have no other income. Strange.

I Will ring the 0300 number with all the info I have.

[boxtops]

Let us know how you get on, chrissa.

I don't always understand how these anomalies arise - two years ago, they gave me back £1200, then last year they asked for £864 back!

[chrissa1]

I will, boxtops. Fingers crossed.

[whistonian]

Yes talk to the Tax office. Like you i have other pensions besides the state pensions and they are taxed at source.I'm assuming this tax bill is for 2012/13.You should have received a P60 from each pension company stating pension entitlement and total tax deducted for year.You should save these.

[New Judge]

The root of this may be the tax code used by your three pension providers.

You should remember that although your State pension is paid free of tax it does, in fact, form part of your taxable income. (Your tax code should have been reduced to account for this). This means that if the total of your State pension and private pensions exceed the tax-free allowance (which was £8,105 for 2012-13) then tax will be payable on the excess Also bear in mind that, unless you have told the tax office to inform them individually as to how you want your tax deductions handled, each of your three pension providers might be allowing too much tax free.

I can understand if you don’t want to share the information publicly, but if you do, give me your income figures and I will calculate the tax due.

[boxtops]

NJ, I am hoping that my situation is as you describe (sorry, chrissa) - my allowances on my paid work income are very low to allow for the tax on my State pension, then my other sources of income are taxed at BR, and we sort it all out at the end of the tax year.

[chrissa1]

State Pension = £476.60
Pension 1 = £107.71
Pension 2 = £ 96.79
Pension 3 = £ 48.34

Total/month = £729.44

For New Judge. Thanks

[ubasses]

£729.44 x 12 = £8753.28 - £8105 = £648.28 x 20% = £129.66 tax for year

I have assumed that you have taken your 4 weekly state pension and calculated a monthly figure and that the allowance New Judge has stated is correct. (I am sure it will be).

[chrissa1]

That's the figure I get, ubasses.. A bit of a difference. Thanks.

[pixie373]

It's almost exactly double. If under a certain amount, it can be carried forward to the next year. Is that what's happened?

[chrissa1]

How can that happen? These are their figures, not ones I have dreamt up.

[factor-fiction]

It may be that they are also trying to recoup some underpaid tax from a previous year.
As others have said, the state pension counts as taxable income but tax isn't deducted at source, so some people with other income paid without tax deducted can find that have more tax to pay.
It depends on whether you pay tax at 20% basic rate on all your other pension or whether there is a tax allowance applied to one or more of them.
What tax codes are shown for each of your pensions?

[New Judge]

Check that you have calculated your state pension correctly(if you receive £476.60 for each payment you will get 13 of these per annum, in which case the tax due will be £224.97 -still less than the amount they say you owe). The most usual cause of these problems is the taxman overestimating the State pension payments.

[factor-fiction]

I agree with NJ- you need to multiply your state pension by 13.
These are paid gross.
If you other pensions are paid Gross then the tax due should be similar to what has been demanded.
If they all have tax deducted at 20% then I think you are due a rebate
Are the figures you have quoted for the others all net of tax? Can you also provide the gross figures?