Inland Revenue

[Dave225]

It is that time of the year again.

 

This morning I found 4 envelopes from Her Majesty’s Inland Revenue on my mat. I suppose I should be thankful, last year it was 6. Each contains a Tax Code for the year about to end, and next year, and of course all are different, so 8 different tax codes. Each applies to a pension I receive and I am sure many of you will say OK, he gets 4 pensions, why is he complaining. Well, as most of them currently pay several coffees in a month you will understand we are not talking mega riches here. I am not a highly paid Public Sector worker or banker and had to make my own provisions where I could. As like others in the private sector I moved Companies throughout life to improve myself, but the pensions did not follow me. Consolidation was a possible option but each Scheme had different ‘rules’ and of course if I picked the one that then went bust, I lost the lot. The old saying about ‘all your eggs in 1 basket’ seemed sensible to avoid.

 

I note that all the Tax Codes come from the same office in Portsmouth which I suppose is an improvement on last year when 6 different Tax offices sent me codes. However, is it beyond all common sense for the same office to not coordinate my small pensions in to 1 single tax code as they have all the relevant information on their desk, or is it 4 different people working this out using my same NI number. In days of old all people in Scotland had their tax office in East Kilbride, 1 office, 1 telephone call usually sufficed. Now it appears it is not the individual that defines this, but where the Company who is paying decides to have their tax affairs dealt with.

 

Fortunately, all I do is ignore them all, and wait until I fill in my Self Assessment Form later this year and then the correct tax is calculated. However, if I was infirm I suspect that all these different codes would ‘panic’ anyone into wondering just what the Hell was going on. No wonder the country is disappearing down the toilet faster than ever.

 

It is a pity ‘Her Majesty’ cannot sort some of the idiotic things that are being done in her name. Possibly sending a few Tax Inspectors to the Tower would do the trick.

 

[net-traveller]

I'm in same situation, made worse recently by the death of 'im indoors.

 

I too receive several letters of coding from a central office but the individual companies are spread over tax offices across the country.

 

The reason you have to have individual codes is so that each individual company pension/annuity can take the current amount of tax. The tax man is not to know whether or not each is a fixed amount or variable and cannot therefore arrange for the whole tax bill to come from one particular company.

 

I'm definitely not looking forward to self-assessment this year although I'm well versed in it.

[CliveH]

Why did you have to start me on this!!!! :-S (lol) (lol) (lol)

 

The computer system the revenue set up was to be more efficient as the old one could not keep up with changes. Bu what the old one did do was allow just one tax code and a nominated pension provider that acted as an umbrella for all the others.

 

OK so at any one point in time it was not 100% accurate. But you could play catch up easily a little way down the line.

 

Now we have a system whereby every provider has to produce a Tax Code - so rather than one provider and one tax office overseeing everything with all the other smaller ones reporting to the nominated tax office, we basically have a free for all.

 

This underlines the rule that when a government department states that it needs £millions for a new computer so it can do better, what it really means is that it needs a bigger computer to get things more wrong than before.

 

[Corky 8]

we have a friend (Pensioner) who is on PAYE and has been battling with the taxman for the last 10 months over her shortfall (they claimed) in her tax contributions,for the past three years amounting to over £3600, despite Too Numerous to count phone calls with them,she eventually gave up and Paid them from her savings the amount in dispute, that was only a month ago, this morning she received a Letter informing her she will receive a full refund of the Payment she had made with thier sincere apologies for the "Error",  if you worked in a say a shop and made a mistake like that do you think you would keep your job, ????? Beggars, Belief.

[Colin Leake]

No comment on this one other than to say the tax inspector has been very kind to me this year. Probably got fed up with the battles they have eventually lost over the last few years since I retired and my tax affairs became somewhat complicated.

[Dave225]

One other comment I would make on the matter is be careful if you get 'investigated'. I had the misfortune to get this a year or so ago. I gather it was a combination of working overseas for a short time and 'pot luck' but the result was 18 months of hassle producing all my bank statements going back 5 years. Any item on them that caught the IR's fancy had to be explained by me with written back up, which fortunately i more or less had. For example a small policy matured and the cash was in my bank account. 3 years later I had to recall what it was, as the Statement merely showed the credit and produce the doicumentation to support it or try to prove it was not 'laundered'. Eventually the IR accepted I was just a normal worker,. not a drug cartel member, but no apology was forthcoming or any compensation for the several hundred pounds I had to pay to get an accountant to support me.

[Guest pelmetman]

Dave225 - 2011-03-02 8:26 PM

 

One other comment I would make on the matter is be careful if you get 'investigated'. I had the misfortune to get this a year or so ago. I gather it was a combination of working overseas for a short time and 'pot luck' but the result was 18 months of hassle producing all my bank statements going back 5 years. Any item on them that caught the IR's fancy had to be explained by me with written back up, which fortunately i more or less had. For example a small policy matured and the cash was in my bank account. 3 years later I had to recall what it was, as the Statement merely showed the credit and produce the doicumentation to support it or try to prove it was not 'laundered'. Eventually the IR accepted I was just a normal worker,. not a drug cartel member, but no apology was forthcoming or any compensation for the several hundred pounds I had to pay to get an accountant to support me.

 

Exactly my experience!

 

As I have said before the inland revenue assume you are guilty unless you can prove your innocent *-) Ten years ago they tried to screw me for 13k 8-) but after 18 months of grief they got £300 and I wanted to fight the B*******d's for that, but my accountant said let them have it so that they can justify their existence >:-(

 

It back fired on them though as my experience led me to realise I was just a public sector meal ticket >:-( So I semi retired and instead of a paying over 10k a year in income tax, plus all the VAT I used to generate, my tax bill this January was 300 quid (lol) (lol) which is more than covered by my tax credits (lol)

[Mel B]

Dave ... how do you get tax credits without kids????? 8-)

[Guest pelmetman]

Mel B - 2011-03-03 10:03 PM

 

Dave ... how do you get tax credits without kids????? 8-)

 

Yes I was surprised to 8-) When I started the new business I self financed it by reducing my drawings from the pelmet company :D

 

We are well used to feast and famine and can get by on very little as thrift is a hobby B-), and we only have a small mortgage which I reduced to interest only.

 

I saw an advert in our local rag saying that if your household income is less than £14500 a year then you would quailify for tax credits8-)

 

So I phoned and explained why my drawings were reduced, and that we had no kids, but to my amazement they said that was ok as it was based on your household income, and not the business income, I also cleared it with my accountant B-)

 

Now though I find myself on the horns of a dilemma :D

 

As now the new business is up and running and providing a useful income stream:-D soon I will have paid up the credit card debts I built up starting it, so I will be able to increase my drawings again :D

 

But I could keep my drawings low and buy a new van for the business :-D

 

So my quandary is do I work the system? or start paying off the mortgage again :-S

 

To echo Martyns thread...."What is fair"?

[Big Momma]

I am a Public service worker but would certainly dispute the 'Highly Paid' tag ! However, for the last 5 years I have had to fill in Self Assessment Forms (Short Version), couldn't understand why as some of my colleagues on same Grade and pay don't have to do this. My salary is the same every year and the only other income is from my military pension that is a set unchanged amount every month (No increases). At long last the Inland Revenue appear to have seen sense and have advised me that with effect from this year I no longer have to complete a self assessment form :D :D

[Dave225]

Big Momma,

 

Without knowing any details, which are none of my business, I can only state that the reasons to fill in a Self Assessment form are varied and often illogical. You could have just been the number that came up for an arbitrary one, you could have tried to reclaim interest on an account as you are a non taxpayer, it is just possible your pension was filed under a different category. The workings of the IR are a mystery to most of us. I also suspect that you may miss the next year but thereafter they will send you one again, just because they like you.

 

There are plenty 'fat cats' in the public sector and many poor penniless ones. I thnk it is accepted by the majority that if we made half the top 20% redundant we could solve the public sector problems at a stroke. However, they are the ones who will never leave and cost us all fortunes.

 

 

It is a bit like one of the Principals of a so called u'university' on the telly the other night complaining about spending cuts and how many Courses will have to be scrapped. And then we find out he is currently getting £300K per annum.

[Guest pelmetman]

Dave225 - 2011-03-04 5:52 Pm

 

There are plenty 'fat cats' in the public sector and many poor penniless ones. I thnk it is accepted by the majority that if we made half the top 20% redundant we could solve the public sector problems at a stroke. However, they are the ones who will never leave and cost us all fortune

 

Spot on :D but as its the fat cats who decide who gets the push *-)

 

I predict after all the cuts we will end up with less frontline staff, but just as many managers...........possibly even more >:-(

[flicka]

To Inland Revenue or HM Customs & Excise, the individual Taxpayers are easy targets & IMO often harried just cos they can.

Yes, there will be some individuals who "fiddle" their tax, but it pails into insignificance compared to many major Companies Tax avoidance methods.

ITV's Tonight programme last night - "The Great Tax Gap", identified many Companies avoiding £Billions of Tax.

 

[catinou]

Big Momma - 2011-03-03 11:41 PM

 

I am a Public service worker but would certainly dispute the 'Highly Paid' tag ! :D

 

I second that - my husband has worked for nearly 37 years, at low pay, for the NHS and as he nears retirement ( his pension payments have been a major deduction over the years and he has voluntarily paid extra for the last 3 years to maximise his pension) the government starts making, very loud, noises about changing the goalposts to appease all the people complaining "it's not fair" - how much do they actually pay during their working lives - I know a huge number of people to which that answer is "nothing" :-S

 

I do appreciate the private pension argument though as my own fund was hit by a miserable succession of changes and is now paying a fixed rate pittance BUT I paid a tiny amount compared to the NHS pension...... *-)

[CliveH]

I do not think anyone is suggesting that key NHS, Police or Fire personnel are part of the overpaid public sector workers.

 

What those of us in the private sector do object to is the sort of job likes this:-

 

"Thank heavens for the public sector, where the pay is still great but where you can enjoy security too. You think you couldn’t find a more extravagant bonus culture and an even more absurd system for rewarding failure than exists at the banks? Just look at the public sector. In fact, let’s start by looking at the public sector employee who was charged with the task of monitoring the banks to ensure they didn’t get into trouble. That man was Clive Briault, managing director of retail at the Financial Services Authority.

 

Having failed completely to detect anything wrong at Northern Rock, he resigned last April. That is as it should be, except that far from falling on his sword, Mr Briault appears to have been allowed to run off with it and melt it down and use the silver to augment his pension. The FSA’s annual report reveals that he left with £356,452 of compensation for lost salary and bonuses, £36,000 of pension contributions and £202,500 for ‘compensation for loss of office’.

 

Hang on, let’s just get this right. An employee resigns because he failed to do the job demanded of him — and he still gets paid a bonus, plus compensation for suffering the ignominy of having to resign. His case is not a one-off. Take Rose Gibb, who left her £150,000-a-year job as chief executive of the Maidstone and Tunbridge Wells NHS Trust just before the publication of a critical report by the Healthcare Commission into an outbreak of Clostridium difficile in which 345 patients died. To see her on her way, the Trust offered her a £250,000 severance package. Only £75,000 of this was pay in lieu of her notice: the other £174,573 was, as with Mr Briault, ‘compensation for loss of office’.

 

Although, after an outcry, the Health Secretary, Alan Johnson, tried to block the payout, he later backed down and allowed Ms Gibb her £75,000 in lieu of notice. Even so, she has gone to the High Court to claim the full whack."

 

So - we all like to have ago at the wunch of bankers who seem to cock up and still get huge payouts - but the Public Sector has been doing this for years.

 

The full article is at:-

 

http://www.spectator.co.uk/essays/all/3367806/want-a-big-bonus-get-yourself-a-public-sector-job.thtml

 

And I repeat - no one is having ago at the low paid Public Sector, but even so, whilst the amount personal contribution in most PS schemes is 6%, (it can vary depending on position = but 6% seems to be the median) the tax payer/employer provides another circa 14% to actually pay the bill for the public sector pensions. This is true regardless of how much you earn as a public sector employee.

 

The value in cash of any pension can be approximated by multiplying the annual pension by a factor equivalent to the pension in payment. level annuity rates are about 6% but an annuity that is linked to inflation (as is the PS schemes) is far more costly and 3% is a valid figure. So an individual who works in the public sector for 40 years and retires on a final salary of £20,000 will get 40/80ths of Final salary plus 3 times the pension as tax free cash (I am citing the older NHS scheme here rather than the new 60th based scheme that has just been introduced.)

 

So the pension will be £10,000 and that to buy on the Open Market would cost someone in the Private Sector:-

 

£10,000/3 x 100 = £333,333.

 

And don't forget the £30,000 tax free cash to add onto that - so the total pension package for someone in the Public sector with a final salary of £20,000 and 40 years service is circa:-

 

£333,333 +£30,000 = £363,333.

 

Very few Public Sector workers have a true idea of the value of their pensions or the tax burden the schemes place on the ordinary tax payer.

 

And if anyone thinks that a worker in the Private Sector on £20,000 pa has any chance whatsoever to accrue a pension pot of over one third of a million GBP - then they are very VERY much mistaken.

 

But it is part of the employment contract for the Public Sector. And some PS employment contracts enable individuals to accrue more that 1/80 per year of service. The Police can accrue 2/80 as could some Mental Health workers from age 50 so that they can retire on a full pension at age 55 – this seems reasonable to me when these jobs carry a great deal of stress. The best one I ever came across was the old Judicial Pension Scheme – become a Judge and you could accrue 4/80’s for every year on “The Bench”.

 

I could quite fancy accruing 40/80ths in just 10 years. :-S

 

An even when you multiply the above figures as set out for a PS employee with a Final Salary of just £20K, for someone who earns £200K a year in the Public Sector - as opposed to the canon fodder that earn £20,000 a year and you start to see why the term "FAT CATS" applies to more than just that wunch of bankers we all love to have a go at.

 

 

 

 

[Dave225]

Just to add an addendum to Clive's comprehensive post I suspect many of us are concerned to find that a good many of the 'public sector' workers manage to get huge pay rises in the last few years of their working life. This has the effect of knocking their final salary Pension up wholesale. I gather that a Scheme using 'average' salary levels is being promoted. This will not affect the lower paid workers who follow the rules all their lives, but may stop the unscrupulous getting a pension that is unconnected to their total working life. After all, every pound they take out is less for others. 2 years as a 'cat' on £150k and then retire on 2/3rds that. Not bad if you can get it. I also know that for many years teachers could take early retirement at age 55, with usually enhanced pension rights. This meant they could easily take 30 years money out of the Scheme, and even have sufficient life expectancy to take another job as well. This was often offered as a replacement for the redundancy many of those in the private sector could expect in similar circumstances.

[Gwendolyn]

It was, in reality, extremely rare for early retirees from teaching to be awarded 'enhancement'. It was given only in exceptional circumstances.

[Big Momma]

I think my first point is that many people make sweeping statements about 'Public Sector' employees which tars everyone with the same brush whilst their gripe may be actually be aportioned towards the 'fat cats'. As I have said, I am a public sector worker and certainly nowhere near the 'fat cat' brigade. Whilst those like me on average earnings have to settle now, without recourse, to what is a 3 year pay freeze, the Private Sector employees that I know and work alongside have not had their salaries frozen, some may be limited to 2 or 3 percent increase but at least this is offsetting some of the continually rising costs whilst we in the public sector become progressively worse off.

 

As for getting bigger pay increases in the latter years prior to retirement to get a bigger pension payout, what planet is this one ? Perhaps some contributors are talking from days gone by but we are not living in that era so perhaps there is some re-education needed as far as what really goes on in the public sector these days. I am talking from normal peoples jobs now and not the minority of public sector workers on the big pay outs.

 

As for Teachers being able to retire at 55, another one of those 'old out of date information' quotes. My OH could retire from teaching now if she wanted too and her pension would be frozen until she was 60 when she could then claim it ! So if you think that she could retire at 55 get a teachers pension and then take another job as well, I am afraid that you are mistaken. The only one's that I know can do this are the Police Force and the Military, but they do not have to wait until they are 55, in the military they only have to serve 22 years and can then retire and get their pensions straight away so in fact if you joined at 18 you could retire on a pension aged 40.

[Dave225]

I can only comment from iformation I see and read. It would appear that a study of Council Reports will show a quite dramatic increase in salary levels at the top over the last few years, and when any of them leave the size of the 'pension pot' they take is enormous. I cannot believe that has been 'earned' over 40 years because salary levels were never in that league.

 

As for teachers it did occur quite a lot here north of the border. In fact I have a relative who did exactly that, retired at 55 and then went back as a 'supply teacher'. Her comment was that there were to be 'cuts' in staff so pensioning them off was the Education Dept easy option. 'Volunteers' were actively sought. They are changing things now but possibly a case of stable door and horse etc as so many are now getting the pension that it will not make any real saving for quite a while.

 

I, like others have never stated that ALL public sector workers are in the fat cat brigade, infact have made the opposite point. However, when nearly 1/3rd of my Council Tax is merely to pay for the pensions of staff I think I am entitled to ask what is going on. No one paid for my pension, I did that myself.

 

I note that the Hutton Report soon to be published is likely to state that the current system is untenable, so change will have to happen. Possibly the quicker the better for all, or those at the back of the 'queue' will lose out. I regret that any talk of strikes etc is not likely to solve anything as no one has any money nowadays.

 

By the way, to get back to my OP. I received another 2 Tax Codes toady so back to my annual 8.

[Big Momma]

Dave225 - 2011-03-08 5:48 PM

 

I can only comment from iformation I see and read. It would appear that a study of Council Reports will show a quite dramatic increase in salary levels at the top over the last few years, and when any of them leave the size of the 'pension pot' they take is enormous. I cannot believe that has been 'earned' over 40 years because salary levels were never in that league.

 

As you 'quote' "At the Top", and I am not disputing your point at all, but how many are there at the top and how many underneath them at the top not getting the 'cream and honey', quite a lot I would suggest. All i was trying to elude to is that many posts, not just this one, often use the generic term "Public Sector Workers" and that I am afraid is what I meant by a wide sweeping statement. You state that you pay for your own pension, again a fact I do not dispute. However, by inference that indicates that 'Public Sector' do not contribute towards their own pensions. I think youwill find that they do. Not disputing that it may well be supplemented and that you may well raise a fair point when making comparisons but let's make sure that all the statements are clear and accurate as their will be those out there who will read such sweeping statements and believe everything they read. A bit like the media really, don't let the facts or the truth get in the way of a good story.

 

How long ago was it that your teacher relative was able to take retirement at age 55 with a pension ? Again, I am not disputing that this has happened but it is no longer the case (medical pensions excepted). Again, things have changed and making statements about things that happened in the past is not giving the reality of the situation now.

 

Where did you get the statistics from that show that one third of your Council tax is to pay for the pensions of staff ? I would genuinely be interested in getting that in writing so that I too can voice my dissatifaction.

[Guest pelmetman]

Big Momma - 2011-03-08 6:47 PM

 

However, by inference that indicates that 'Public Sector' do not contribute towards their own pensions. I think youwill find that they do. Not disputing that it may well be supplemented

 

 

Sorry to split hairs :D ...........Supplemented???? I think you will find that is not correct, the public sector is wholly funded by the private sector.

 

So... however... it ends up in the public sectors employee pension pot, it has come out of the pockets of the private sector *-)

 

For the last decade the private sector has stagnated under the weight of the tax burden and increased legislation foisted on it by the public sector *-) So if people want to complain about the cuts they need to have a chat with their Labour MP (lol) (lol) ............Not us in the private sector ;-)

[Big Momma]

pelmetman - 2011-03-08 8:06 PM

 

Big Momma - 2011-03-08 6:47 PM

 

However, by inference that indicates that 'Public Sector' do not contribute towards their own pensions. I think youwill find that they do. Not disputing that it may well be supplemented

 

 

Sorry to split hairs :D ...........Supplemented???? I think you will find that is not correct, the public sector is wholly funded by the private sector.

 

So... however... it ends up in the public sectors employee pension pot, it has come out of the pockets of the private sector *-)

 

For the last decade the private sector has stagnated under the weight of the tax burden and increased legislation foisted on it by the public sector *-) So if people want to complain about the cuts they need to have a chat with their Labour MP (lol) (lol) ............Not us in the private sector ;-)

 

So the percentage that they take out of my pay every month categorised "Pension - Employers Contribution" YOU are actually paying for me...........I DON'T THINK SO *-)

[Guest pelmetman]

Big Momma - 2011-03-08 8:29 PM

 

So the percentage that they take out of my pay every month categorised "Pension - Employers Contribution" YOU are actually paying for me...........I DON'T THINK SO *-)

 

 

If you work for the Public sector then I think you will find I do,..... along with my fellow private sector workers :D.............Where else does the money come from?

 

If you dont work for the public sector then you are generating genuine income and paying the real tax to pay our public servants :D

[malc d]

I am quite happy to pay taxes to support a public sector as long as those people are doing a worthwhile job, at a reasonable cost.

 

What I don't understand in the public sector is where 'bonuses' come from.

 

In the private sector, if your company makes a profit, you MAY, if you are lucky, get a share of it as a bonus. No profit, no bonus.

 

Where, in the public sector, can you make a profit ?

The perception is that those bonuses are paid for by simply putting up taxes.

 

 

;-)

[Big Momma]

pelmetman - 2011-03-08 8:58 PM

 

Big Momma - 2011-03-08 8:29 PM

 

So the percentage that they take out of my pay every month categorised "Pension - Employers Contribution" YOU are actually paying for me...........I DON'T THINK SO *-)

 

 

If you work for the Public sector then I think you will find I do,..... along with my fellow private sector workers :D.............Where else does the money come from?

 

If you dont work for the public sector then you are generating genuine income and paying the real tax to pay our public servants :D

 

So working on YOUR principle, the private sector funds the Public sector and therefore pays my wages, pays my income tax, pays my N.I etc. Okay, can see where you are coming from.

 

The private sector employs staff, the staff provide a service to the public and the public pays for it so that they can pay their staffs wages and make a profit to pay bonuses. So with your Principle, the public are paying the wages of that employee, their income tax, their N.I. etc.

 

So I guess what you are really saying is people stop moaning about your pay, the amount you pay in income tax, your N.I. contributions because you are not in fact paying this yourselves, somebody else is ......... Radical but you just may have something there :D