Is it true my tax allowance does not refer to pounds and pence ?

[seekinginspiration]

I cant believe it. I have just been told by a person at my employer's tax office that the tax allowance does not refer to pounds and pence and because I underpaid by £350 in the tax year finished March 09, My 2009-10 tax code has dropped to 468. Should I believe this ? I know I didn't get £350 extra in fact the job I've moved to (with the same employer) earns less on an hourly basis !!!

If your tax code is 468L then you will not be taxed on the first £4680 that you earn. This is divided up over the year so each month you are not taxed on the first £390 (4680/12) you earn.

Without knowing all the figures it's impossible to say whether you underpaid or not however, you may have been on the 'wrong' tax code during 08/09 and therefore been underpaying all year.

Instead of requesting £350 as a lump sum payment from you the tax office reduces your tax free allowance and claims the money back over the course of the year.

HTH a bit

your tax code refers to the amount of money you have to earn in a year before you start paying tax. It's gone down this year so they can get back their £350 - basically, instead of paying no tax on the first £6k of your salary, you pay no tax on just the first £468 of your salary. The tax you pay after that will get them back their £350 over the tax year.

I know it's complicated but be grateful - because my earnings come mostly from dividends not salary my tax code is MINUS £5k.

oops left off a 0, sorry, treetrunk is right

OK, thanks. Not happy but I know I'm lucky to have a job and at least the child benefit comes straight to me. So how much does it cost to get 08 - 09 tax allowances checked - would it cost more than that the amount I'm likely to save?