Can someone explain why a tax code can be slightly less due to untaxed interest on savings and investments.
What I don’t understand is you get interest for maxing out an account in a bank but it seems its kind of pointless if your tax code reduces by the amount of interest you get from using the banks account?
what was the interest the bank paid last year compared to this year?
you have a tax free rate for interest based income. this reduces to zero if you’re making over £150k a year. im not sure how that’s collected though… are you sure the bank hasn’t just changed the interest rate?
These types of changes happen for a variety of reasons and it would be a waste of time enumerating them here. In my case these things got corrected via the Self Assessment declarations. If you don’t submit an SA the correction often happens after filling in a P800 form. My suggestion to you is call them up again and tell them that you don’t have dividend/interest income that exceeds £2000 and accordingly you don’t understand what has been untaxed.
Additionally, if you have left an employment recently or have joined a new company your former employer may have not deducted some final tax and declared that to HMRC and/or you may be under an emergency coding. This would explain the discrepancy.
I have had the same problem, tax code reduced by £80/ After waiting a couple of hours, got through to HMRC who did not really have a clear answer. It seems that it is coming from the bank and applies if you earn less than personal allowance and is related to interest on savings. It has not happened before so not sure why they are taking it away from tax code last year and this year. Tax people say not to worry and it will all be OK. I wont be taxed on it and they wont really take it away from my personal allowance. So still a mystery… but hopefully it wont affect my tax position when I get my pension increase next month. They say that they will just increase my tax code and will ignore the bank amount…I should not have to pay tax. Lets see! Will be interesting if anyone else can find out more.