Tax Code Help

[INeedAnotherName]

I'm embarrassed that I don't know the answer to this as I feel a normal adult should know so please be kind.

DH received a letter from HMRC today stating that his tax code is changing from M to L (and owes tax back), however he is denying that he changed it. Why would the tax office change someone's code without the person asking them. And can DH be the only one to change this or can his work payroll do it?

It was changed to M several years ago as we transferred some of my tax allowance to him (as per Martin Lewis website) and we've had no letters questioning it since then.

I know we are having marital problems so i am unsure if he did actually do it in anticipation of divorce papers...

Could it be that you are earning above the limit now?

Has your income changed? Maybe you have more income now so marriage allowance cannot be done.

Payroll cannot change it. HMRC issues tax codes. He can check on the HMRC App that his annual estimated income figure for each employment is correct - changing that can trigger a tax code review.

Is he earning more now?
are you earning now?
did he have any benefits in kind?
HMRC will change codes if they aware of other income etc

An individual can influence their tax code by speaking to HMRC but it is ultimately HMRC not the individual or their employer that decide it.

This change might be an administrative error or the choice to transfer allowance only lasts a certain time or it might be he has changed something with HMRC. Hope you get it sorted.

Whilst you can request a change of tax code, HMRC also automatically update them for changes information. It is likely this was triggered by the submission of a P11D by his employer if he has taxable benefits such as private medical insurance as the deadline is coming up. Have you had more income this year? It might be you have no personal allowance to transfer to him anymore. It could just be an error, HMRC make a lot of those.

It is HMRC who change tax codes not the individual. He is no longer benefitting from you giving him some of your tax free allowance. The only person negatively affected by this is him. If you have started to earn more than your tax free allowance that will be the reason why.

@Hellocatshome - HMRC will change it if you ask (and what you are asking is reasonable). I.e you have two jobs and you’d like to use your full personal allowance on one but not the other. They are usually pretty obliging.

So it’s possible he rang up and said he didn’t want to claim it anymore, but given it was giving him more money I’d say it’s just as likely HMRC updated it for something else and accidentally took it off.

Thanks for your responses. I see i have omitted a huge piece of important information, sorry!

I have no income due to ill health. His wages are our only income. There are no savings. He does not have private medical insurance. No company car or other perks. We do not claim benefits (except for PIP). There has been no change in our circumstances for several years.

He may have changed it OP but I’m not sure what benefit that would give him even if he was thinking of divorce. It would be an odd thing to do rather than carry on getting more tax free money as long as possible. I would perhaps not focus on this and maybe focus your energy on the wider issues because if he is adamant he didn’t change it , you have no way of knowing what’s happened I am afraid. I hope it works out for you.

As PP have said the tax code is set by HMRC based on their understanding of your situation and income. It's intended to ensure the amount you can earn before becoming liable for tax and the rate you pay once you're liable is right.

If your OH's income has changed, he's received a benefit in kind, or HMRC think he's underpaid in a previous year, than the tax code will change.

I'm no expert but clearly in some circs you can have two. Mine allows my full 'free pay' (ie tax free allowance) against an occupational pension then BR for my earnings from a part time job.

IIRC there's plenty of info about how to interpret them on HMRC's website and, no doubt, the are plenty of independent sources too.

I see his payslip. Apart from a wage rise in line with inflation nothing has changed. No benefit in kind. He's worked there for ten years, eight of them with the M code.

This is why I cant work it out, but from the replies here it's either an unexplained weird admin error at the tax office, or he changed it which is unlikely for two reasons - he actually owes them back tax now, and he's too lazy to do any phonecalls etc (won't even answer the phone). Life admin is my "job".

My tax codes changed recently - seems to change two or three times a year. It’s highly unlikely he’s had it changed. It basically is what it is.

How much does he earn? Have you seen his P60 for the last tax year, they've been submitted in the last few weeks so the timing would be right.

Could he have been drawn into the 40% tax bracket because his wage has risen above the £50k after pension contributions level where he's no longer entitled to take part of your tax code?

If he has a government gateway account, or you're able to set one up, you could log into that to see if there's any messages that could explain the change.

@BarbaraofSeville - that’s a good shout, I forgot it’s only basic rate taxpayers who are eligible. That is the most likely explanation I think.

@BarbaraofSeville oh bugger, I think you found it. He cashed in an old works pension this year and that's taken him just over the £50k.

So the twat got horrendously taxed on it the week it went in his paypacket and now its pushed him over to the next tax bracket so he owes tax back AND it's changed his code so we have less money going forward. And I never saw a penny of that lump sum. I absolutely despair. What an idiot.

Thank you though.

If it was just a one off year of earning over 50k, then make sure you put in another marriage allowance claim for this year.