Skip to main content

This is a new service – your feedback will help us to improve it.

Posted Fri, 22 Dec 2023 12:23:55 GMT by Nigel Hoult
I asked HMRC to collect tax due on savings etc in 2023-24 through my PAYE code (which I had not done in the preceding tax year) and I am trying to check and, if necessary, update my PAYE code in order to achieve this. My income is such that I fall into the 40% tax bracket. Some items in the calculation of the code are obvious (company pension, state pension) and for others it is easy to see how they were computed from my 2022-23 tax return (pension contribution, gift aid, untaxed interest) but for others I am at a loss to understand how they were derived, specifically: * Dividend tax (the amount bears no relation to the tax I paid on dividends in the previous year) * Taxed interest (the amount far exceeds what I received as savings interest taxed at source) Also, if I go the the page where I can update the numbers (and hence my tax code), all I see apart from pensions is dividend income (the correct figure from my previous tax return) and non-coded income (which matches foriegn interest from my previous tax return) - no mention of other savings interest, whether taxed or not, despite this forming a major contribution to my tax code. Is there anywhere where the calculation process is explained, please, and/or can anyone explain why the categories and amounts do not match as I would expect?
Posted Fri, 05 Jan 2024 12:18:07 GMT by HMRC Admin 25
Hi Nigel Hoult,
We would need to access your record to check and update the code if needed.
You can contact HMRC here:
Income Tax: general enquiries
Thank you
Posted Fri, 05 Jan 2024 16:43:40 GMT by Nigel Hoult
I appreciate that you would need to access my account to see the details specific to my data, but that isn't what I was asking. Presumably whoever created this web page was working to a specification of what figures should be displayed and how they would be computed from data on a person's tax return (since there is no one-to-one correspondence), and that is effectively what I was asking for. By working through the figures and comparing against my tax return and calculation, I have come to the following conclusions - although they may not be correct in general as I have limited data to go on: "Untaxed interest" is any UK interest not taxed at source (whether from savings or investments that pay interest rather than dividends), minus the savings allowance. "State pension" is the actual amount. "Taxed interest" seems to a combination of two things: actual interest that is taxed at source, and a portion of share and unit trust dividends. If this is added to "Dividend Tax" then it seems to be (in my case at least) the amount of dividends, less the dividend allowance, multiplied by 33.75% and divided by 40% (since tax is due at 33.75% but collected at 40%) - this would obviously change for someone in a different tax bracket. However, I do not understand the significance of the split, which is roughly 26% as "Dividend Tax" and the rest included in "Taxed Interest". In the course of this I also found errors in the presentation on other pages. The page "your detailed PAYE income tax estimate" says that my private pension income is estimated as £X, which it then helpfully splits into £A taxed at 0%, £B at 20% and £C at 40%. However, X is not the sum of A, B and C, because it is in fact an estimate of my TOTAL income rather than just the private pension income as stated. The sum of A, B and C is not my private pension income either - it is private pension plus state pension. Perhaps this explains why I feel the need for an explanation of the calculation used, in the same way that there is a "tax calculation guide" that enables you to replicate the calculation on the tax return. It would be even better (and much simpler!) if the two used the same notation!
Posted Fri, 12 Jan 2024 10:29:35 GMT by HMRC Admin 25
Hi Nigel Hoult,
For the tax code it is based on your income from your different sources and the tax code will give a breakdown of the information used to calculate the code including pensions income, State Pension and savings income.
If you think that your tax code is incorrect then you will need to contact HMRC to review and explain your code. 
Contact details here:
Income Tax: general enquiries
Thank you. 
 

You must be signed in to post in this forum.