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New Tax Code OT W1, Very Confused, threshold?
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# 1
*speed-queen*
Old 26-12-2010, 11:07 PM
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Thumbs down 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
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# 2
jd87
Old 26-12-2010, 11:16 PM
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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

Quote:
NT - Is used when no tax is to be taken from your income or pension
Quote:
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.


Last edited by jd87; 26-12-2010 at 11:21 PM.
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# 3
*speed-queen*
Old 26-12-2010, 11:18 PM
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Quote:
Originally Posted by jd87 View Post
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

Dont know why I would be on either of those
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# 4
melancholly
Old 27-12-2010, 12:19 AM
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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!
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# 5
CLAPTON
Old 27-12-2010, 9:46 AM
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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.
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# 6
*speed-queen*
Old 28-12-2010, 8:33 PM
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Quote:
Originally Posted by CLAPTON View Post
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
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# 7
Mikeyorks
Old 28-12-2010, 9:43 PM
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Quote:
Originally Posted by *speed-queen* View Post
.......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 !
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# 8
jimmo
Old 28-12-2010, 10:22 PM
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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.
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# 9
*speed-queen*
Old 29-12-2010, 10:27 AM
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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'
So I shall ask him when I'm next at work, armed with the information from you guys
and possibly ring HMRC today!
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# 10
patanne
Old 29-12-2010, 10:56 AM
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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.
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# 11
*speed-queen*
Old 29-12-2010, 11:35 AM
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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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# 12
*speed-queen*
Old 30-12-2010, 8:11 PM
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received another weeks wages today
Still have the tax code OT W1

asked my boss if we could have a chat today
as my tax code is wrong

and was told
'All you do is cause hassle, talk to me about it next week'

this time next week,
I will have been paid again,
no doubt with the wrong tax code again!

From what you guys have been saying I think I owe around £100 in tax as I have only paid £20 so far this year
I'm slightly concerned that it will be taken out all at once and leave me with no wages for a week

not impressed
x
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# 13
Mikeyorks
Old 30-12-2010, 8:21 PM
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Quote:
Originally Posted by *speed-queen* View Post
From what you guys have been saying I think I owe around £100 in tax as I have only paid £20 so far this year
I'm assuming no tax deducted this week? In which case the Code '0T' isn't being used as you would pay 20% every week. So your payroll lady must be using NT.

You need to chat to the boss and quietly point out that any under deductions will be his responsibility as PAYE is not being operated correctly. May just cause him to take some responsibility.
If you want to test the depth of the water .........don't use both feet !
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# 14
*speed-queen*
Old 30-12-2010, 10:34 PM
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Quote:
Originally Posted by Mikeyorks View Post
I'm assuming no tax deducted this week? In which case the Code '0T' isn't being used as you would pay 20% every week. So your payroll lady must be using NT.

You need to chat to the boss and quietly point out that any under deductions will be his responsibility as PAYE is not being operated correctly. May just cause him to take some responsibility.
Sorry didn't explain this weeks wage slip well
I did pay tax on OT W1

Wage Slip 4:
01/01/2010
£23.00 Tax Paid
60p NI Paid (!)
Earned £91.90 After Tax
Tax Code OT W1
Total Gross Pay £5567.92

Total tax paid TD £40.80

totally fed up of this now
harrummphh

will try and see if he's feeling more reasonable next week!

thanks for the help everyone!
at least I'm armed with what to say!
x
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# 15
Mikeyorks
Old 30-12-2010, 10:52 PM
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I hope that's your error with the date? (s/b 01/01/2011)?

Right ..... so she is at least operating on £zero allowances. Even though there's no justification for doing so! Quite bemusing.

At this point in the year (£5568 gross pay) you should have paid around £142 in tax ........ so you are sitting on a £100 underpayment.
If you want to test the depth of the water .........don't use both feet !
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# 16
*speed-queen*
Old 30-12-2010, 11:15 PM
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Quote:
Originally Posted by Mikeyorks View Post
I hope that's your error with the date? (s/b 01/01/2011)?

Right ..... so she is at least operating on £zero allowances. Even though there's no justification for doing so! Quite bemusing.

At this point in the year (£5568 gross pay) you should have paid around £142 in tax ........ so you are sitting on a £100 underpayment.
lol yes, should have been 01/01/11
well spotted!

I thought as much,
I remember something similar happening last year and them taking £70 in tax off me all at once in one week (leaving me with around a tenner)
hopefully that wont happen again, if they are trying to recoup it now

thanks for all your help
you have been very constructive/ informative!
x
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# 17
*speed-queen*
Old 30-12-2010, 11:18 PM
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ha - Mikeyorks
just found my old thread from my last tax balls up

http://forums.moneysavingexpert.com/...peed+queen+tax

so that is what may happen when my tax code gets corrected :/

thought u may find it interesting
x
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# 18
Mikeyorks
Old 30-12-2010, 11:23 PM
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Quote:
Originally Posted by *speed-queen* View Post
you have been very constructive/ informative!
x
Thanks. And a bit perceptive at post #7 where I suggested they're getting your Codes out of the christmas crackers!

Seriously .... there's little excuse for this. If your payroll lady is doing the wages every week then it's just as easy to get it right as get it wrong. And far less onerous on you ... not knowing what the wages slip is going to conjure up this week.
If you want to test the depth of the water .........don't use both feet !
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# 19
Mikeyorks
Old 30-12-2010, 11:31 PM
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Quote:
Originally Posted by *speed-queen* View Post
ha - Mikeyorks
just found my old thread from my last tax balls up

http://forums.moneysavingexpert.com/...peed+queen+tax

so that is what may happen when my tax code gets corrected :/

thought u may find it interesting
x
Right ...... you need to look at Post #6 (on that last year's thread) from Chrisbur? As that fairly well explains the rather mysterious 0T that keeps cropping up.

If you aren't completing a P38 (?) ........ then it needs a hard word with the boss to ensure the Code issued by HMRC is used. And not a bit of DIY from payroll.

Might be worth reading :-

http://www.hmrc.gov.uk/paye/employee...l/students.htm
If you want to test the depth of the water .........don't use both feet !

Last edited by Mikeyorks; 30-12-2010 at 11:36 PM.
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# 20
jimmo
Old 31-12-2010, 12:05 AM
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Maybe I should have been a bit more forthright earlier when I suggested you have a word with payroll. Whilst HMRC may be the right place to get tax advice if your boss thinks you are a pain in the rectum for moaning about your tax deductions then you really need to work on your people skills and get him on your side.
If, as a result of your phone call to HMRC, the payroll lady gets a letter from HMRC saying code 647L is correct and she does exactly that you could be hit with no pay for some weeks whilst the arrears are paid off.
If she puts you on code 647 W1 that allows you to earn £124.50 a week without paying tax and if you earn less than that your unused allowances will go begging.
If she keeps you on code OT W1 you will pay 20% tax on everything and whilst it may be painful you will be gradually knocking down the arrears that have built up.
That really is a mess and you need to keep a cool head.
I would still suggest that the best solution for you would be for you to sit down with your boss and the payroll lady and thrash out the best solution for you. If you cannot do that then maybe another call to HMRC asking them to issue code 647L W1 will get you on the right track for the time being but nobody can tell whether you will be underpaid or overpaid by the end of the tax year.
That all depends on how much you earn in the remainder of the tax year.
If you are underpaid at the end of the year HMRC will not send you a bill, they will seek to recover the underpayment over future years.

Last edited by jimmo; 31-12-2010 at 12:26 AM.
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