Xero Tax(UK) - Ability to change default tax code
Ability to change tax code
Not everyone has the default tax code, an option to edit the tax code.
James Sowden
shared this idea
Thanks for the added feedback, James - Connecting with our Xero tax UK team on this I want to be upfront that there's no plans to develop for your idea here.
To explain the rationale here - As you'll understand, tax codes are used with the aim that people pay the correct tax on their employment income and do not underpay or overpay, so that a tax return or repayment claim forms do not need to be completed.
Tax codes are only used against PAYE sources. The actual personal allowance is to be used in the self assessment calculations.
- Personal allowance is reduced in the calculation if someone earns above £100k or they transfer their marriage allowance.
- If a person receives the marriage allowance, then this is provided as a tax reducer at the bottom of the calculation as per legislation.
Allowing Personal Allowance to be set based on tax codes would not match HMRC's calculation and result in failing submissions, as they use personal allowance or a reduced version where necessary.
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James Sowden
commented
Hi Kelly,
For personal tax, when preparing a tax return the default tax code in the system is 12,570 or 1257L, which is used in the tax calculation.
Many clients have different tax codes, someone may have a part time partner who utilises the marriage allowance so their tax code is higher.
Some clients are high earners, where their personal allowance is reduced or non existent.
The tax calculation always uses the 12570 as the personal allowance so for some clients that tax calculation is incorrect.
The ability to change an individual's tax code so when producing their tax return the tax calculation shown is correct.