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Lizzie59 said:
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At £350pw he is earning under the income limit for the extra allowance. However, if he had been earning more, the extra allowance is supposed to be reduced by £1 for every £2 over the limit.
If his tax code is 1050L he will be paying tax if he's earning £350 pw on a regular basis.
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Yes, I was referring to the income limit of £26,100 for the higher level of personal allowance for people born before 1948 shown here: http://www.hmrc.gov.uk/incometax/personal-allow.htm#1
The calculation for the personal allowance above that limit is income related, reduced by £1 for every £2 over, so I wasn't sure if it was something the employer would have to do throughout the year, or perhaps ar year end.
I was confused by the way the information was presented in the exam question. Rather than providing a tax code and an explanation that it was higher than normal because of the employee's age (as I assume HMRC would have done), they provided the information that the employee was to receive "his full pensioner's tax allowance" and expected me to know (or look up) the relevant higher level of personal allowance, and deduce his tax code from it.
I just wanted to check that this isn't how things are normally done.
And then, what is the process (who is responsible for fixing the inevitable error) at the end of the year, for employees born before 1948 earning slightly over £26,100 and so who receive a partially reduced personal allowance. Does the employer fix it with the final payment? Does HMRC correct it with a tax code for the following year? Or must the employee contact HMRC to sort it out?
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