tax code changed and big drop in salary

saad

Hello to all nice people here.

I was earning £28500 gross per year until August 09. take home pay was about £1799. Then I get increase of £1500 making my salary 30K/year. After that I got a letter from HMRC that my personal allowance is changed due to benefits such as life insurance and critical illness from employer (which i was getting since starting job 2 years ago). And now when I received my September pay cheque, my salary is £1744 net.

I am not good, with these calculation at all, but its looks very strange to me that I was getting £1799 net when I was on £28500 gross,, and when I am on £30000 gross I am getting £1744 net.

If someone with more knowledge about this can explain what have happened here, I will really appreciate that.

Many thanks for your time

Saad

thorsoak

The insurance provided as benefits in kind by your employer is deemed as income. Because you weren't taxed on it for two years, HMRC have adjusted your tax code no so that this under-paid tax can be deducted over the next six months.

You should find that your tax code will change again next April and you will then see the benefit of pay increase.

saad

Thanks thorsoak for your response.

When I spoke to tax office they actually did not tell me that they are taking backdated payment now.
Do you think my employer should have told to tax office earlier about benefits?

Many thanks

thorsoak

I think most employers give these details when they send in the end-of year Form 60 returns to the Tax Office. I've always known that it has been taken retrosectively.

WestonDave

One other thing to point out - it is likely that due to a mid year code change, this first month will be worse as it has to back date the effect of the code change. That being the case and having done a few back of a fag packet sums, I would expect your take home pay to go back up to something like £1860 next month.