HMRC have assigned me a weird tax code starting K and ending X

[roberto1820]

Had a look at my latest coding notice while filling out the return, and this one is well weird. Tax code assigned to me is

K2698 X

. The notes indicate that HMRC think I have income which would be untaxed otherwise (see below). This seems wrong, as I only have one source of income: my employment.

I am a high-earner (total above 150K including bonus this year), but I have also been stuffing my pension via salary sacrifice, to use up remaining allowance from previous years. I guess I have sacrifice approx 65K this year (I told payroll to pay me 3K per month net, and divert everything else to pension). But coding notice still says I have 0 personal allowance, and unpaid tax of 19K from previous year, whereas my previous return was for a small refund (again, due to large amount of Gift Aid during COVID times).

Do I need an accountant? Or will HMRC work work everything out properly once P60 for this year is filed?

Thanks for any help.

Tax Code K Shows that you have untaxed income which is more than your
tax-free allowance and needs to be added to your wages, salary
or pension so the additional tax can be collected.
Tax Code ending in X Shows we will review the tax you have paid after 5 April

 

[jb21]

@roberto1820 It's because PAYE copes badly with the withdrawal of the personal allowance at your salary bracket.

It will all balance itself out once you complete your self assessment, so only a temporary situation.

Once you have your P60 and P11D forms, submit your SA and you'll be fine.

You don't need an accountant...

 

[roberto1820]

@jb21 !thanks

 

[am80]

@roberto1820 Call them. Get it sorted. State tour income sources and so on and they will tell ilyounifnthey need to have that changed or recover womnetax your behind with.

 

[eltan]

@roberto1820

I guess I have sacrifice approx 65K this year

Are you using previous years pension allowance? Otherwise you are in excess of standard pension allowance and that might do screwy things to your tax code potentially (or cause you some other problem later on)

 

[roberto1820]

@eltan yes. I checked with HMRC calculator that I had approx. 85K total allowance available this year.

 

[jb21]

@roberto1820 Also

https://ukpersonal.finance/tax-efficiency-for-high-earners/

 

[reformed]

@roberto1820 Log in to your HMRC account and check your estimated earnings for the year, I bet it's wrong. You can change it yourself, and you'll get a new tax code in a few days. Just enter in whatever you think your total taxable salary will be for the year.