PAYE Notices of Coding 2010-11
PAYE Notices of Coding 2010-11
Each year HMRC issue notices of coding to those taxpayers on PAYE who have anything other than a standard tax coding. For 2010-11 the standard tax code is £6475 (the same as 2009-10).
There are two common issues for taxpayers with Notices of Cding that have been issued for 2010-11.
1. Many of the Notices are simply wrong. In some cases, reference is made to employers from several years ago, in others there is no reference to the state pension that is being received, and so on. This will ultimately mean that the wrong tax is deducted from the taxpayer. This will either be too much or too little. Either way this is not good and will need correcting.
2. The new regime for higher-earners comes in in 2010-11. This means that on earnings in excess of £100,000 there is a withdrawal of the tax allowance at a rate of £1 for every £2 earned, so that once earning more than £112,950 the entire standard tax allowance is gone. Beyond earnings of £150,000 the rate of tax is 50%! This means that taxpayers who are expected to earn more than £112,950 are being sent Notices of Coding with a standard tax allowance of nil. The correction to this (if one is required) will only arise when the 2010-11 tax return is completed.
In either case, if you believe your tax coding is incorrect you should query it through us, or with HMRC, as it will affect the tax you pay during the year, as well as not necessarily leaving you with no further liability at the year end.