Tax Code 100L

baileyjnr

Hey Ladies & Gents,

Been reading lots of great advice on this forum however now I could do with a little guidance, myself.

Basically I've just received my pay and been taxed (PAYE) over £1000 for the month (normal around £500), and my Tax Code appears to have changed from 647L CUMUL to 100L CUMUL. I am afraid I know not nearly enough about tax codes, so if someone could give me any info? Much appreciated...

Of course I will be contacting tax office Monday morn, first thing - just would be good to get a heads up so I don't sound stupid on the phone!

gallygirl

From recollection, most tax codes end in K or L. A tax code of 500K means you can earn £5000 (all codes are x 10) and are then taxed on top of this. The code is pro-rated across the months. So, an increase in a K code means you keep more of your pay.

From recollection, and it seems to be borne out by your example, L codes are similar, although they are referred to as allowances . 647L means you keep £6470 of your take home pay (again, pro-rated) and are taxed on the rest. 100L means you are taxed on all income above £1000, hence the difference in your wages this month. They are reducing your tax free allowance by £5470 a year, £456 a month, meaning an extra £91 tax to pay each month. You will presumably have paid more tax for this month, plus a backdated sum for previous months.

Something has obviously triggered this. Have you had a change of circumstances? Do you receive a pension or benefit which is classed as taxable? Have you income from another source? Have you underpaid tax, or is it possible the IR think you have?

Hope you get it sorted quickly.

Rolo_Tomasi

You should have received a PAYE coding notice which gave details of why your tax code has changed. There are a number of reasons this could happen and posters here can only guess at which one applies to you. Some possible explanations could be:

1. Have you started to receive benefits ie company car, medical insurance etc?
2. Did you underpay tax last year which is now being collected?
3. Have you started to receive a pension?
4. Do you receive other untaxed income?
5. Do you have 2 jobs?

When you contact the tax office you need to ask for a breakdown of your tax code.

chrisbur

gallygirl wrote: »

From recollection, most tax codes end in K or L. A tax code of 500K means you can earn £5000 (all codes are x 10) and are then taxed on top of this. The code is pro-rated across the months. So, an increase in a K code means you keep more of your pay.

Just to clarify on K codes.........
A K code works the opposite to an L code and is shown with the K before the number. So in the above example it would be shown as K500 and would mean that tax was deducted on the full gross pay plus another £5009. As the code shows the extra that is due to be taxed an increase in the code results in higher tax.

As advised on the original question if you do not have a notice of coding you need to contact the tax office.

trevormax

With a reduction this large HMRC should have put you onto an emergency (W1/M1) code to prevent a massive tax bill. I'm shocked that they actually reduced it on a cumulative basis.

Gallygirl is correct in saying you are paying extra tax for the months of April to today and this has caused the huge tax bill. Next month however, you will only pay £91 more on the 100L code compared to if you were on the 647L code.

You should have received a coding notice saying why your code has been reduced. If not, phone HMRC and complain. Tell them their actions have dropped you in the brown stuff and you will be sending in a written complaint.

System

trevormax wrote: »

With a reduction this large HMRC should have put you onto an emergency (W1/M1) code to prevent a massive tax bill. I'm shocked that they actually reduced it on a cumulative basis.

You should have received a coding notice saying why your code has been reduced. If not, phone HMRC and complain. Tell them their actions have dropped you in the brown stuff and you will be sending in a written complaint.

I agree with trevormax but when you call HMRC ask them what previous code they had for you on their system. Sometimes the code HMRC think they are replacing is not the one the employer was actually operating. If they tell you it was 647L then ask them why 100L was issued on a cumulative basis and make a formal complaint.