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Posted Wed, 07 May 2025 16:50:11 GMT by Ray Thomas
Hi I had a long conversation with HMRC yesterday - they were helpful, but I never nor do I still understand the reason he gave me so I was wondering if someone here could help me. I retired 2 years ago after being made redundant, I left my company on 31st March...as I was entitled to a pro rota bonus, this was the last payment I received on the payroll. HMRC took Tax of £190 that was the last time I paid tax ( April 2023 ) so my Tax code was 1257L so other than my small pension I received each month I was well off the 1257L so they said that I would be entitled to a refund of the tax I paid. So, I logged onto the app and I notice that my tab code had changed to 1062 - They told me that this was due to me paying interest over my PSA - but I asked that as I'm not tax payer ( as I'm retired and pension is small ) would this be incorporated to 1257L . He said it was, that why my tax code changed - Thats the bit I don't understand - so I can earn less now before I pay Tax ? Also he said that if I give them the Interest amounts ( I have certificates from my savings account ) he would trigger the rebate manually Can I do this ? Sorry for the long text as I panic when I talk to HMRC after hanging on for 45 mins - stressful Thanks Ray
Posted Thu, 08 May 2025 19:28:35 GMT by Clive Smaldon
Not HMRC...If your interest is such that it is over the PSA HMRC would in the first instance include it in a tax code. This is therefore deducted from your personal allowance, meaning that then if you earn over the reduced code you are (correctly) paying tax due on all your income above the personal allowance. The interest in your tax code is always an estimate, based on the previous year. When the actual figure is known its built in to the tax calculation for that year, retrospectively, if youve paid too little the underpayment is then coded forward, if too much you get a refund. The interest figure in the following years tax code may then update to the known figure (though its still an estimate but based on a more recent year), and so on and so on each year. Hoepfully you have/will receive the refund for 23/24 soon if income was less than personal allowance. If this expalantion is too complicated, Im sorry, I tried to keep it as simple as possible.(not easy)
Posted Fri, 09 May 2025 07:20:13 GMT by HMRC Admin 21 Response
Hi Ray,
Your 25/26 tax code has most likely been reduced to 1062L by a prediction of what your untaxed interest will be in 25/26.
This predicted amount is based on your previous year's interest, and is added to your code to help you pay the correct tax on 25/26's untaxed interest. That said, you are entitled to The Personal Savings Allowance of £1000, and the Starting Rate for Savings of £5000 - additional tax free allowances that are applied to savings income (Tax on savings interest).
If your other income for 25/26 (pensions, employment, etc) exceed the tax free allowance represented by your tax code (1062L means £10,629 tax free income), then these additional savings allowances would be applied, and your total tax free allowance of £12,570 would be restored, either immediately, or following the end of the tax year.
As for your rebate, if we are still awaiting confirmation of your 23/24 interest figures, and you have those figures, you can provide them to trigger your rebate - you can contact us by webchat, post or phone via Income Tax: general enquiries to confirm your figures.
Thank you.
Posted Fri, 09 May 2025 09:25:03 GMT by Ray Thomas
Hi Many thanks for your response, appreciated, and I can just keep re reading it until I understand :-) Ray

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