HMRC income tax demand

[Lifestooshort71]

Hi, I'm retired and my state pension is over the tax allowance so I get a tax demand usually in August/September each year. I haven't had anything yet - is it usual for the letter to arrive some time randomly between now and January? I don't want to nudge them (and pull the tail of the tiger) but i do like to pay my bills sooner rather than later. TIA for any thoughts.

Have you got an online account with HMRC?

They're a bit of a faff to set up but once there are a good way of seeing what's afoot.

Like previous poster, open an online account to see what’s happening. With my DH he has his tax codes changed if he owes anything, letters are very hit and miss.

I am retired and pay tax mine gets taken monthly by HMRC ,I have an app

I am retired and pay tax mine gets taken monthly by HMRC ,I have an app

Gets taken monthly how ?
DWP can't deduct tax form the State Pension, so HMRC can only deduct any tax owed from any other private pension you may get paid monthly.

If your only income is the State Pension but you are over the Tax Allowance ,then the standard way of dealing with it is as the OP says - to send a bill for the tax owed after the end of the tax year.

I suspect that this year given the triple lock and the freeze on tax allowances that there will be far more letters having to go out, which might explain the delay the OP is experiencing form previous year.

If you open an nline account as suggested by other posters the form is more or less self explanitory to fill out, even if you have a small business/side hustle. The form will tell you how much you owe.

The on line is called Government Gateway account.

My MIL literally just got her letter yesterday.

She has state pension, attendance allowance and a tiny pension credit... don't know if they are all taxable, but she got a letter saying effectively, "we don't/can't take tax during the year, but here's a run down of what you owe... please pay by Jan".

Aren't attendance allowance and pension credit tax-free benefits?

My mum doesn't pay any tax, should she be checking if she's over the tax allowance each year? She only gets state pension, PIP and pension credit.

PIP and pension credit aren't taxable and if she gets the standard personal allowance and the standard rate of SRP, the total SRP will be below the personal allowance and no tax will be due.

If she has other income, eg dividend income over £500 or significant interest on savings where tax isn't deducted at source, she may be liable for tax. However, I think that's highly unlikely, as that income and/or capital would probably take her above the threshold for pension credit.

Thanks @LakieLady , that’s helpful.

Thank you everybody (sorry, been out doing stuff). I should have said that I do have an online account and am checking it regularly in case a notification has gone awol. I hadn't put 2 and 2 together that they might be a lot busier this year because of all the newbies falling into the tax trap so will just have to sit and wait to hear. I get a bit anxious about money going out and the sooner I know the damage the sooner I can budget for it. Thanks again x

I don't actually have a tax code - I'm tempted to think they pluck an acceptable figure out of the air (always a nice round figure) .

It's a really stupid system. If it's all PAYE why bill at the end of the year? Particularly those just over the threshold. If they die then it falls to the next of kin to pay. I had to pay a £550 tax bill after my mum died and her total tax for the year was only £1000 and I'm paying it off by the deadline at £100 a month. When I looked back at her affairs it had increased due to attendance allowance, and prior to that they would regularly bill her £300 at the end of the year instead of changing the tax code and it coming out of her tiny private pension. Someone on a very low income could easily have an elderly partner in the same boat who then suddenly has £500 to pay, or it could be an insolvent estate.

the problem is that it's not all PAYE.
DWP don't have the infra structure to start deducting tax at source from benefits, and even if people get income from another source such a a private pension where HMRC can adjust the tax code, ,the rules are that they are not allowed to deduct more than 50% in tax from that.

so someone with a large state pension and small or non-existent private one is going to end up owing tax at the end of the year.

The previous year, so 24-25 this time, is usually sorted by October-ish.
I keep checking my GG account because I’m due a tax refund but it’s still saying 24-25 isn’t yet available. I don’t know if it’s done alphabetically but my name is at the end of the alphabet.

I'll bet money that it's not alphabetical by name - even if they worked through the database via an index, it'd be on something unique like your NI number rather than first or surname, which can change at any point

but I suspect it'll just trawl through more or less at random ....

Also waiting for a tax rebate... my name starts with S. So does MIL, and her letter for tax owed just came through, so I have my fingers crossed it is alphabetical... but not holding my breath.

How do you not have a tax code everybody has a tax code the basic for everyone is 1250 if you earn above that you pay tax 🤔

Use an online calculator to work out how much it will be roughly and stick the money in a savings account.

Pay it close to the last possible day and earn a bit of interest in the meantime.

I think everything is a bit behind, far more people are having to pay tax on savings interest than they thought would, also many more having to pay dividend tax from shares, as that has gone down to £500. I read somewhere that some of this wouldn't be sorted until next March. I had to report my dividends for the first time as it was just over £500, all extra work and my tax liability from this will be about £4

You DO have a tax code.
in as much as you have a tax free allowance.

try the online chat via your gateway and ask them to work it out.

ultimately though, tax is “self assessment” so it is your responsibility to work it out and pay what you owe.

if you don’t you can face penalties. It’s not an acceptable defence that they didn’t do a tax calculation and write to you with an amount payable.

I know that’s rubbish! But it’s how they operate!

HMRC are collecting more monies from penalties than anything else at the moment and are looking for excuses to issue them!

you’re obviously switched on to the scenario, so don’t let yourself fall foul of the awful system.

if in doubt, you could find an accountant … but that would come with a charge.

You probably earn more interest with HmRc !
… though they tend to send it back (even tax owed and wrongly allocated!) to avoid paying interest

Everyone’s tax code isn’t always 1257.
Mine is split but is 1132 total.
DH’s is 1382 due to me transferring £1250 marriage allowance to him.
It can also reduce if you are paying owed tax by PAYE.

"If the State Pension is your only income
If you go over your Personal Allowance and you have tax to pay, HMRC will send you a Simple Assessment tax bill. This will tell you how much you owe and how to pay it"

This is how it works and how it has worked for the last 9 years.