#TaxQuestion #TaxCode #TaxHelp
Hey everyone! 👋 So, my girlfriend recently started her first job and noticed that her tax code is C105TX instead of the usual 1257. She’s paying more tax than expected for a part-time job, and we’re a bit confused. Before we contact payroll/HMRC, I wanted to reach out and see if anyone has any insights or advice on this situation.
Here’s a bit more context:
– Fortnightly pay: £417.17 gross, £75.20 tax paid
– Additional income from a pension payment from a deceased parent
– Named as a director on a parent’s company without receiving a salary
Any thoughts on why her tax code is C105TX instead of 1257? 🤔 Could these additional factors be affecting her tax calculation?
Possible solution:
– Check if her tax code reflects the pension payment or directorship
– Consider contacting HMRC for clarification on the tax code discrepancy
– Look into potential tax relief or adjustments based on her circumstances
Any advice or experiences you can share would be super helpful! Thanks in advance for your input. Let’s crack the tax code mystery together! 💡💸
>She’s paying too much tax
I’m willing to bet she’s close to accurate. (Edit: I’d have have lost that bet!) The X means “We’ve looked at the situation and it’s a best guess” I would assume because:
>being paid a pension payment each month from a deceased parent
She has income that’s taxable. I’d hazard a guess it plus any benefits/dividends is about 11520 a year (960 a month)? (Edit: it wasn’t, but HMRC allocated the tax code as if it was)
The T in the code means “We’ve split your tax code elsewhere too” which I’d assume is the pension and any benefits she receives.
Edit: As a note PIP isn’t a taxable benefit so doesn’t count in my estimate of £960 a month.
Check the coding notice on her online Govt Gateway account, it will explain.
No one here could possibly know if her tax code is right or wrong or why it’s been issued.
When she started the no? If your girlfriend started this job recently might be an emergency tax as usually those end in X.
Ex-Personal Tax Advisor here:
There are a great number of things that can reduce your personal allowance.
1st off, you haven’t stated if this is her only job or her only job this financial year. You very often see tax codes like these if you have other income or if you have underpaid tax in a previous role.
2nd, the pension payment probably has something to do with it. How much is she getting a month? Whatever she gets annually, unless she’s being taxed on that too, will be deducted from personal allowance.
As the tax code 1257L denotes you are able to receive £12579 of tax free income from whatever source that tax code is applied to, her part-time job one denotes she can earn £1059 tax free from that role.
The pension payments are taxable and therefore whatever sum they come to annually will be deducted from the tax free allowance.
If the pension payment fluctuates this can also cause issues, aka if the tax free lump sum was claimed in this financial year and the tax wasn’t reclaimed on this.
Now all of the above is THE THEORY. The system is automated to make decisions based on the most logical mathematical division of income at the exact moment of calculation and doesn’t simply automatically get reviewed every time there is a change to the account e.g new income source. I saw a TONNE of this issue when people worked contract roles and changed employers multiple times in tax years.
Also, sometimes but rarely if the company doesn’t give a predicted annual income for you this will be estimated from your first pay check. Say she started and only did 1 weeks work in that pay period but is actually doing the same amount of shifts week on week. The system will estimate the annual income from the first months pay (even if it wasn’t representative).
In addition, you say she is named as a director but doesn’t get a salary. You may want to check this info if the pension route doesn’t add up because she may be down for self assessment income earned, whether or not she is actually receiving this is a different matter.
All of this is to say, if non of the above makes perfect sense, or tbh even if it does the only way you’ll find out for sure is she calls HMRC.