Thousands of elderly face tax code peril

By JAMES CONEY FOR THE DAILY MAIL
Updated: 03:57 EST, 21 April 2010

Campaigners fear thousands of pensioners may fail to act on incorrect tax codes.

Advice group TaxHelp for Older People is worried that the elderly will lose hundreds of pounds in tax payments by failing to spot errors in their pay or pension income.

Thousands of incorrect tax coding notices were sent out earlier this year. While many taxpayers spotted the mistakes, or were sent a number of codes and so realised the errors, others will have failed to spot the mistake.

Errors: Thousands of incorrect tax code notices were sent out this year

Some were sent no coding notice at all - and in other cases employers or pension firms were sent codes different from those of the taxpayer.

This would mean pensioners could receive less income than they were expecting, as it would be taxed more heavily. It is only now that April payouts are being made that many will spot the error.

TaxHelp for Older People is urging pensioners to spot the signs of an incorrect code. These are:

• BR - you will be taxed at the basic 20 per cent rate on all income, because the tax-free allowance of £6,475 has been taken away.
• DO - you will be taxed at the higher 40 per cent rate on all income.
• OT - usually for pensioners. You will be taxed at the basic rate on all income without being given a tax-free allowance.
  

If you are uncertain about your tax code, phone the HMRC helpline on 0845 3000 627. Over-60s with a household income of less than £17,000 a year can call TaxHelp for Older People on 0845 601 3321.