New Tax Code, no £60 Rebate and Paying More Tax

Sam_Spends_Too_Much

Husband now has the correct tax code of 603L after previously being allocated 633L in error; but instead of receiving the £60 rebate, his tax has increased and we are now paying an extra £15 each week. Does anyone know why that would happen. I expected to pay roughly the same because of the increase in the personal allowance - I don't understand why we've ended up paying more. We've had no letter from the Tax office saying we owe them money so I'm guessing we're not paying any back.

Any help would be greatly appreciated.

chrisbur

Sam_Spends_Too_Much wrote: »

Husband now has the correct tax code of 603L after previously being allocated 633L in error; but instead of receiving the £60 rebate, his tax has increased and we are now paying an extra £15 each week. Does anyone know why that would happen. I expected to pay roughly the same because of the increase in the personal allowance - I don't understand why we've ended up paying more. We've had no letter from the Tax office saying we owe them money so I'm guessing we're not paying any back.

Any help would be greatly appreciated.

I cannot give a full explanation without knowing the exact figures and how the tax codes have been applied. What is needed is gross and tax figures for each week this tax year along with the tax code and tax basis ( that is if week 1 basis or cumulative)

I can say that the weekly tax difference between 633L and 603L, assuming that tax is paid only in the 20% band, is about £1.15. If this was applied back to the beginning of the tax year it would mean an extra £30 approx on this week's wage. As neither figure agrees with your extra £15 there must be some other changes to account for.

As far as the "£60 rebate" is concerned your husband has received it. Having the wrong code of 633L meant that he was underpaying tax by about £3.50 a week compared to a code of 543L. The increase in the code to 603L has cancelled out about two thirds of that underpaid tax.

As I said at the beginning this is not a full explanation as from what you have said there must be some other code change or variation in earnings.

stratty

if you are a higher rate tax payer you will actually be slightly worse off because they reduced the threshold for 40% tax

Sam_Spends_Too_Much

stratty wrote: »

if you are a higher rate tax payer you will actually be slightly worse off because they reduced the threshold for 40% tax

We earn roughly £23000 a year, that isn't the higher rate is it?? Not up to date with all the tax things, I'm more clued up on kids things now

CLAPTON

Sam_Spends_Too_Much wrote: »

We earn roughly £23000 a year, that isn't the higher rate is it?? Not up to date with all the tax things, I'm more clued up on kids things now

23000 is standard 20% tax rate.
as already said, the reason his income has fallen is that he was on too high a tax code and they have now corrected it to 6035
do you know why he was on too high a code... was there a reason from last year?.. say an allowance to do with his job?

Sam_Spends_Too_Much

chrisbur wrote: »

I cannot give a full explanation without knowing the exact figures and how the tax codes have been applied. What is needed is gross and tax figures for each week this tax year along with the tax code and tax basis ( that is if week 1 basis or cumulative)

I can say that the weekly tax difference between 633L and 603L, assuming that tax is paid only in the 20% band, is about £1.15. If this was applied back to the beginning of the tax year it would mean an extra £30 approx on this week's wage. As neither figure agrees with your extra £15 there must be some other changes to account for.

As far as the "£60 rebate" is concerned your husband has received it. Having the wrong code of 633L meant that he was underpaying tax by about £3.50 a week compared to a code of 543L. The increase in the code to 603L has cancelled out about two thirds of that underpaid tax.

As I said at the beginning this is not a full explanation as from what you have said there must be some other code change or variation in earnings.

He was on 562L instead of 543L - hadn't realised the code was wrong until I looked because of the £60 rebate. His company then incorrectly changed it to 622L (apparently they are told to add 19 to any previous tax code to get the new code for the new tax year ) instead of 603L. It was at this point I phoned the tax office and they sent out a new coding notice.

We're now on W25 with a total taxable pay of 11533.71 (total pay 11616.64) and have paid in total 1725.80 in tax.

I'm guessing that as he has been underpaying tax for so long the tax office are taking it back.

Sam_Spends_Too_Much

CLAPTON wrote: »

23000 is standard 20% tax rate.
as already said, the reason his income has fallen is that he was on too high a tax code and they have now corrected it to 6035
do you know why he was on too high a code... was there a reason from last year?.. say an allowance to do with his job?

We phoned the tax office a couple of times last week and they couldn't shed any light on the tax code. They said we should have been on 543L and couldn't understand why we were on 562L. When I asked hubby's employer, all they said was that they were told by the tax office to add 19 to all their employees tax codes to get the new code for the new tax year.

Seems a bit of an odd way to do tax codes, but if thats what they were told............

fengirl_2

Code numbers dont usually come out of thin air (although I have come across employers making them up and pocketing the difference). Are you sure your OH is not entitled to a fixed rate expense deduction? What does he do?

chrisbur

Sam_Spends_Too_Much wrote: »

He was on 562L instead of 543L - hadn't realised the code was wrong until I looked because of the £60 rebate. His company then incorrectly changed it to 622L (apparently they are told to add 19 to any previous tax code to get the new code for the new tax year ) instead of 603L. It was at this point I phoned the tax office and they sent out a new coding notice.

We're now on W25 with a total taxable pay of 11533.71 (total pay 11616.64) and have paid in total 1725.80 in tax.

I'm guessing that as he has been underpaying tax for so long the tax office are taking it back.

As at week 25 on code 603L you are allowed to earn £2903.75 which if you take that away from taxable gross of £11533.71 leaves £8629.96. Tax due on that at 20% is £1725.80. Tax is taken on whole pounds only that is why some people might see their tax vary by 20p even though their gross is the same every week.
This means that the tax is now correct and the underpayment of tax has been collected. The difference from now on between 603L tax and 633L will be about £1.15 extra tax a week.

Each year a notice is sent to employers advising on tax code increases and April 2008 was for a 21 place increase for L codes. Anyone on the basic allowance (ie 603L at the moment) would have been on 522L at the end of last tax year. If you check your husband's P60 for last year 07/08 this should have the code of 522L on it. The 19 place increase his employer is referring to happened in April 2007 so they do seem to be getting a bit confused as the code was 30 places adrift.

Sam_Spends_Too_Much

fengirl wrote: »

Code numbers dont usually come out of thin air (although I have come across employers making them up and pocketing the difference). Are you sure your OH is not entitled to a fixed rate expense deduction? What does he do?

He's an HGV Class 1 driver. When he does nights out (which he hasn't for a few months) he gets paid an extra £20 which isn't taxed.

jem16

stratty wrote: »

if you are a higher rate tax payer you will actually be slightly worse off because they reduced the threshold for 40% tax

And increased the tax-free allowance. Both should cancel each other out.