New Higher Rate Taxpayer

CLAPTON

jem16 wrote: »

That's why you will have paid some tax at 40% in March because of the unusually high March payment.

Each month you get one twelfth of your tax-free allowances and one twelfth of each tax band so the first £450.42 of that £7191.66 would have been tax-free. The next £2900 would have been taxed at 20%. Then the next £3841.24 would have been taxed at 40%.

So basically;

£450.42 = tax-free
£2900 @20% = £580
£3841.24 @ 40% = £1536.496

Total tax for March = £2116.496 which fits in with your payslip.

If this had happened earlier in the tax year your next month's pay would have seen that overpayment of tax adjusted and you would have got it back. However if you are paid monthly that won't happen now as your next pay will take you into the new tax year.

You will have to apply to HMRC for a tax refund now. You should have paid £6275.34 in tax over the whole year and you have paid £6972 so you are due a rebate of £696.66.

It's not your employer's fault though as they have applied the tax tables correctly. It was your March's bonus that made you a higher rate taxpayer for that one month only. However over the year you have remained a basic rate taxpayer.

This would only be true if OH was on a M1 basis... otherwise the total tax for the March pay would be correct.

jem16

CLAPTON wrote: »

This would only be true if OH was on a M1 basis... otherwise the total tax for the March pay would be correct.

Yes I had wondered about that although the OP didn't say there was anything after the 540L code. However with the amount of tax taken in March it seems that there may be.

dmcconachie

CLAPTON wrote: »

This would only be true if OH was on a M1 basis... otherwise the total tax for the March pay would be correct.

Could you clarify this point for me please?

dmcconachie

ok, found the description. Don't think i'd have any reason to be taxed non-cumulatively though, been at the company for 7 years now.