Changing from monthly to 4 weekly pay, why am I paying more tax?

pelirocco · 22 August 2017 at 4:51PM

Overall you should be better off if your salary is higher , you will pay slightly more tax to take into account the extra money you are earning , you wont be more tax then you are earning
This is assuming your tax code is the same
To be £600 less in this pay packet would imply theres a bit more going on then simply changing from monthly to 4 weekly pai

you need to post the figures on your pay slip

p00hsticks · 22 August 2017 at 5:33PM

KM2017 wrote: »

I was told by a payroll assistant that my tax-free allowance would be lower because I am on tax code 1150L. She explained that if I were paid monthly, my tax-free allowance would be calculated as £11500/12 is £958 therefore this is how much I could earn before being taxed and that £11500/13 is £885 therefore I can earn £885 before being taxed. This didn't make much sense to me as income tax is calculated on yearly salary, not how frequently you are paid.

You misunderstand - under the PAYE system your tax allowance is indeed spread equally across your paypoints and so is affected by how often you get paid. The more frequently you get paid, the lower the amount of tax allowance per payment.

If you get paid weekly, you would get 1/52nd of your tax allowance for each weekly payment, monthly you'd get 1/12th of your allowance each month, and in your case, you get 1/13th of your allowance every four weeks.

comeandgo · 22 August 2017 at 5:49PM

She is absolutely correct. Well done to her in explaining it so well.

chrisbur · 22 August 2017 at 6:20PM

KM2017 wrote: »

Hi everyone, thanks for your replies and advice.

I was told by a payroll assistant that my tax-free allowance would be lower because I am on tax code 1150L. She explained that if I were paid monthly, my tax-free allowance would be calculated as £11500/12 is £958 therefore this is how much I could earn before being taxed and that £11500/13 is £885 therefore I can earn £885 before being taxed. This didn't make much sense to me as income tax is calculated on yearly salary, not how frequently you are paid.

Either way, everyone I have spoken to does not think that her explanation is correct and advised that our payroll often mess things up therefore I am going to contact HMRC directly to discuss this.

Could be an error by your employer, or by HMRC, or possibly might be correct. Only way to tell is if you give the full details.
From your P45 need the tax code. the month number, taxable gross to date and tax paid to date.
From your payslip the tax code, week number, taxable gross, tax paid, taxable gross to date and tax paid to date.

KM2017 · 23 August 2017 at 3:21PM

Thanks guys.

I have contacted HMRC and although my tax code was correct on my payslip (1150L), I was still recorded as being on emergency tax BR W1/M1 with HMRC therefore I have paid more tax than I should have.

I have definitely misunderstood the switch from monthly to 4 weekly pay as I thought I was getting taxed more due to having a lower tax allowance. So is it correct that because I will be paid slightly less each pay due to the 4 weekly pay, I won't be paying more tax than if I were paid monthly?

I had not considered that I have moved from a job contracted at 37.5 hours a week to 37 hours a week so this will also account for the lower net income.

The details on my latest payslip are below:-

Tax code - 1150L !!! (W1/M1 with HMRC)
Period Number - 5
Salary - £19,770
Gross pay (YTD) - £2599.89
Tax paid to date - £577.20
Taxable pay to date - £7312.88

4 weekly Gross pay - £1516.60
Net pay - £1141.21 (deductions - Pension £87.96, Income tax £167.80, National Insurance £106.63, Student Loan £13)

Thanks for your help

agrinnall · 23 August 2017 at 3:47PM

KM2017 wrote: »

I have contacted HMRC and although my tax code was correct on my payslip (1150L), I was still recorded as being on emergency tax BR W1/M1 with HMRC therefore I have paid more tax than I should have.

Your understanding is wrong, your tax is deducted by your employer so if they have recorded your tax code as 1150L that is what will have been used. What HMRC say, even though it's wrong, is irrelevant if your employer hasn't applied that code. There's a question to be answered around why the code HMRC have has not been applied by your employer, but the evidence from your payslip is that it hasn't been.

pelirocco · 23 August 2017 at 4:18PM

Your tax looks too high for code 1150, ..?

agrinnall · 23 August 2017 at 8:31PM

pelirocco wrote: »

Your tax looks too high for code 1150, ..?

The problem is that the OP still hasn't given the figures from the P45, my suspicion is that he's already had pay in period 5 in the previous job so some or all of that period's allowance was used up before he was paid in the new job.

chrisbur · 23 August 2017 at 9:19PM

KM2017 wrote: »

Thanks guys.

I have contacted HMRC and although my tax code was correct on my payslip (1150L), I was still recorded as being on emergency tax BR W1/M1 with HMRC therefore I have paid more tax than I should have.

I have definitely misunderstood the switch from monthly to 4 weekly pay as I thought I was getting taxed more due to having a lower tax allowance. So is it correct that because I will be paid slightly less each pay due to the 4 weekly pay, I won't be paying more tax than if I were paid monthly?

I had not considered that I have moved from a job contracted at 37.5 hours a week to 37 hours a week so this will also account for the lower net income.

The details on my latest payslip are below:-

Tax code - 1150L !!! (W1/M1 with HMRC)
Period Number - 5
Salary - £19,770
Gross pay (YTD) - £2599.89
Tax paid to date - £577.20
Taxable pay to date - £7312.88

4 weekly Gross pay - £1516.60
Net pay - £1141.21 (deductions - Pension £87.96, Income tax £167.80, National Insurance £106.63, Student Loan £13)

Thanks for your help

As you have not given your P45 details I am unable to say if these have been correctly included into your wages, if you can give them this can be checked and also ckeck one or two assumptions I have made.
First your tax to date is spot on ( assuming P45 details added correctly) Your taxable pay to date is £7312.88 and on a tax code of 1150L you can earn £4426.80 as at week 20 so tax is due on £2886.08 Tax is only paid on full pounds so 20% of £2886 is £577.20 which is what your payslip shows.

You mention that your payslip shows "Gross pay (YTD) - £2599.89" which I assume is gross pay YTD in your new employment. This would suggest that this is your second payment and the first I assume was done on the emergency tax code. Could explain what HMRC said perhaps their records have not updated for your last payment, though emergency tax is not the same as BR so that remains a mystery. I am assuming it was paid on emergency tax 1150L week1.

Someone mentioned that your tax " looks too high for code 1150, ..?" this has been affected by you moving from monthly to 4 weekly though not in the way that it has been described to you.

If we also assume that your final payment from your old employer was made to you in month 3 then at that point you were given a tax allowance of 3/12 of your full allowance, this would have been £2877.27 This is the equivalent of 13 weeks tax allowance your new employer puts you on a week 1 tax code and gives you 4 weeks tax allowance as paying every four weeks so that takes you to week 17. You then have your P45 added and get paid again for period 5 which gives you the tax allowance for weeks 17 to 20. Problem is you have already had the allowance for week 17 so all you get now is weeks 18 to 20. This results in you paying about £44 more than your tax will normally be, all else being equal.

If any assumptions are wrong let me know and will check again and if you put up your P45 figures will check they have been carried forward correctly, but as far as I can see your tax is correct though your position was not explained at all well. The total tax you will pay is decided by your total taxable income for the year and does not alter however you are paid. But when you move from monthly to 4 weekly the monthly tax allowance does not match the weekly tax allowance in your case you had 13 weeks allowance on monthly but four weekly goes 4 8 12 16 etc.

I have very slightly oversimplified the monthly four weekly relationship. In reality the four weekly pay cycle only covers 364 days. This means that it get out of sync with the tax year and has to be corrected every now and then. About every 22 years or so you get a year when 14 pay periods fall in the tax year known as a week 56. This can get a bit complicated.

EDIT Forgot about the " However, my net salary is £600 less than my previous salary," Will need details of the payslip that is £600 more than your current payslip to see what is happening here.

FeryUK · 13 October 2017 at 7:36PM

It doesn't matter how often you get paid (4 weekly or monthly), as long as the yearly salary is higher than at your previous job, you should be earning more. You can use online tools such as suggested above (ex: income-tax.co.uk ) to see exactly how much tax you should be paying. I hope it's all sorted by now for you.

Changing from monthly to 4 weekly pay, why am I paying more tax?

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