April 15th 2015
If you are a director or employee, this will be a year to pay particular attention to your PAYE code. The standard tax code for 2015/16 will be 1060L. This gives £10,600 tax free pay, so if your tax code is different, make sure you know why. As your tax adviser is no longer sent a copy of the notice of coding, if you think it may be wrong, let us know.
Two of the reasons why a tax code could be different from the standard 1060L are:
The new Marriage Allowance
If you have a spouse or civil partner who is not a taxpayer, or who has savings income, the new ‘Marriage Allowance’ means that you may be able to save tax by transferring 10% of his or her personal allowance (£1,060) to the partner with the higher income. There are two main conditions:
Some publicity has said that the lower income spouse must have income of under £10,600 a year for the Marriage Allowance to be ‘claimed’, but this is misleading. From 6 April 2015, the first £5,000 of savings income is taxed at 0%, so the lower income partner could have significant savings income and still not be a taxpayer. ‘Savings income’ includes bank and building society interest, but not dividends paid by PLCs or private companies.
The timescale for this allowance is not completely straightforward. Although there has been a lot of advance publicity about the allowance, the online system will probably launch about the time you read this and it is unlikely to be fully functional before the summer.
Owing money to HMRC
HMRC has long had a power to collect money owing to it by changing PAYE tax codes. This can be a useful way of paying smaller tax bills, but from 6 April 2015, the limits increase. HMRC will be able to recover much larger debts through PAYE: up to £17,000 a year for those on incomes of £90,000 or over. Make sure you know what you owe HMRC and how you are paying it.
If you would like to discuss this further please contact DSC Chartered Accountants in Harrogate.
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