New Tax Code OT W1, Very Confused, threshold?

Hi
I was wondering if anyone can help me please!

I am a Uni student working about 14 hours per week,
but sometimes more in the holidays

I have been in my current job 5 years, and only generally pay tax near the end of the financial year when I just go over the threshhold

I got my wage slip today and I have been taxed 20%
and not paid any N.I (usually I pay just a little)

What is confusing me is I have only earned £5400 so far this year
not enough to start paying tax yet right?

My old tax code was NT W1
but it has now changed to OT W1

Can anyone explain to me if this is normal / correct
or why this might be?
Or if someone has screwed up somewhere?

Thanks in Advance

xXx
«13

Comments

  • jd87
    jd87 Posts: 2,345 Forumite
    Name Dropper First Post First Anniversary Combo Breaker
    edited 27 December 2010 at 12:21AM
    Can't tell you exactly what your situation might be, but the HMRC's definitions for those codes can be found here:

    http://www.hmrc.gov.uk/incometax/codes-basics.htm
    NT - Is used when no tax is to be taken from your income or pension
    Tax code ‘0T’ means your allowances have been used up or reduced to nil and your income is taxed at the relevant tax rates.

    I know that when you have W1 or M1 after your code it means that your personal allowance is spread out proportionally over the year, so maybe they can see you will go over your personal allowance, so they are taking tax now to spread your payment out.
  • jd87 wrote: »
    Can't tell you exactly what your situation might be, but the HMRC's definitions for those codes can be found here:

    http://www.hmrc.gov.uk/incometax/codes-basics.htm




    Don't know if that helps or not.

    thanks for the reply
    hmmm
    doesnt mean anything at all to me really
    :think:
    Dont know why I would be on either of those
  • melancholly
    melancholly Posts: 7,457 Forumite
    Combo Breaker First Post
    any chance you did extra hours? i've been in situations as a student where for some mistake, about six weeks went through as one go, so i went over the weekly threshold for tax. very annoying, but could be claimed back.

    although i don't understand why you would pay tax without NI. that's odd!
    :happyhear
  • CLAPTON
    CLAPTON Posts: 41,865 Forumite
    Combo Breaker First Post
    facts and figures would help

    -presumably you have only one job?

    -if so you should be on a tax code of 647L

    NT is used for bankrupts and students who ONLY work in the holidays; so you should never have been coded NT

    NI is paid once you earn more than 110 per week or 476 per month... how much did you earn?

    Tax is a usually a cumulative tax
    if you are on a 647L code you can earn 6475 per annum before tax ; however the way it works is that this allowance is pro-rataed throughout the year so each momnth you get a month tax freee amount of 6475/12 i.e. about 540


    you need to contact the HMRC to get your coding changed

    if you wish to post up the details of your earnings we can work out what tax, if any, you should have paid.
  • CLAPTON wrote: »
    facts and figures would help

    -presumably you have only one job?

    if you wish to post up the details of your earnings we can work out what tax, if any, you should have paid.

    Thanks for the reply!
    I shall have a go at explaining to you my situation
    I only work one job
    usually 14 hours per week
    but sometimes more over Christmas
    and 3 or 4 days a week over the summer

    I get paid weekly

    so I've found my last 3 pay slips (one per week)
    and on each of them my tax code is different

    Wage Slip 1:
    11/12/2010
    No Tax Paid
    £4.23 NI Paid
    Earned £143.77 after NI
    Tax Code NT W1
    Total Gross Pay £5254.92
    (this week included my xmas bonus, wonder if that effected anything?)

    Wage Slip 2:
    18/12/2010
    No Tax Paid
    No NI Paid
    Earned £98
    Tax Code 674L W1
    Total Gross Pay £5352.92
    (this is an average weeks wages for me)

    Wage Slip 3:
    25/12/2010
    £19.80 Tax Paid
    No NI Paid
    Earned £79.70 After Tax
    Tax Code OT W1
    Total Gross Pay £5452.42
    (this is the week confusing me the most)

    Help from anyone will be appreciated!
    I will phone the tax people tomorrow,
    but I would like to know what I'm talking about first!

    x
  • Mikeyorks
    Mikeyorks Posts: 10,369 Forumite
    First Anniversary Combo Breaker
    .......I only work one job


    In which case (and you sound under 65?) you should have a personal allowance of around £6475 ...... giving a tax code of 647L. Assuming no underpayment of tax is being recovered for previous years.

    If you've genuinely had NT / 647 Wk1 and 0T in 3 consecutive weeks ...... then you should have some P2 (Coding Notices) from HMRC to substantiate? If not it almost sounds as though your payroll people draw the Codes out of a hat / christmas cracker!

    On £5452 gross pay to date you should have paid marginally less than £120 in tax so far since April 2010? You simply need to ring HMRC (look for P2's first?) and query the bemusing range of Codes used ....... and ask they put you on 647L. Get the PAYE reference / telephone number from your payroll people if you don't have P2s.
    If you want to test the depth of the water .........don't use both feet !
  • jimmo
    jimmo Posts: 2,281 Forumite
    Name Dropper First Post First Anniversary
    It sounds as though your employer regularly operates code NT against your wages. That would explain why you normally pay no tax until the latter part of the tax year. Then, once you have exceeded the personal allowance for the year, currently £6475 your employer taxes you on everything over that.
    That is not how the system is supposed to work.
    You really should be on code 647L.
    Then, in the first week of the tax year you would be allowed to earn (6475/52) £124.50 free of tax and you would pay 20% tax on anything over that.
    In the second week of the tax year your wages for week 1 and week 2 are added together and you are allowed £249 tax free and so on.
    The problem you now have is that you total pay to date is £5,452 but the end of December roughly equates to week 39. Therefore at that point you were allowed to have (39/52 *6475) £4,856.25 free of tax and therefore should have paid about £119.20 tax.
    Turning now to your code numbers on your payslips as others have already said you really should not be on code NT.
    Code 647L W1 is not really correct. W1 stands for week 1 basis and we can come back to that if we need to.
    Code 0T W1 is wholly inappropriate. It means you pay 20% tax on everything.
    If you check Wage slip 3, with gross pay of £79.70 the correct tax on code 0T W1 is (79.70*20%) £15.94. So, even using that code your employer has taken too much.
    So what is going on? 3 consecutive weeks with 3 different codes. With the best will in the world, HMRC really don't move that fast.
    Whilst it is possible that HMRC have been involved I rather feel that the problem is more likely to be with your employer.
    There are processes where employers do set codes for new starters but, normally speaking, they should not alter codes for current staff.
    However, in your particular circumstances I find it easy to believe that your employer has found out or been advised that they have wrongly been using code NT in your case and gone into panic mode to recover the tax they should have already deducted.
    I would therefore suggest you have a word with the payroll people to try to understand what has happened at their end.
  • Thanks for all the replies!
    I have had no P2 notices... ever as far as I can remember
    I think its all done by the payroll lady

    Unfortunately its a small independent shop I work in,
    and every time I have queried anything to do with tax before
    the owner tells me to go away, 'the payroll lady knows what she's doing and has never made a mistake before' :doh:
    So I shall ask him when I'm next at work, armed with the information from you guys
    and possibly ring HMRC today!
  • patanne
    patanne Posts: 1,286 Forumite
    It looks to me like your payroll lady has got it wrong all year and is now trying to retrieve the situation without having to admit she's got it wrong. She's tried it one way & it didn't work, tried it another way & it still wasn't working & finally tried it in a way which would claw back the tax due & hopes no-one notices. About 6 or 7 weeks down the line she should be able to put you on the correct code 647L. But, as has already been said, a quick call to HMRC to check what they have as your code is a good idea.
  • just phoned HMRC
    the lady was very lovely and helpful
    The only tax code I have been issued by them is 647L
    and my employer (and the payroll lady) shouldn't change it ever!
    So they are going to issue the payroll lady with a letter stating my tax code should be 647L
    No doubt I will get in trouble at work but oh well!

    thanks again for all the help
    x
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