am i been taken for a ride with my pay????

meme86

i recently started working as a security officer for a large uk company

but i think they are doing me over when it comes to my pay (which is weekly)

I am just waiting for my new tax code (currently on BR1 which 20% i think???)

anyway, my payslip this week is broken down to basic pay is £383.50, salary adjustment is -£176.90, and expenses is £131.97, with total payment £338.57.

(expences cover travel & food, and also uniform dry cleaning.)

I have been taxed £51.83 this week, so £286.74 goes into my bank.


The thing I don't get is the 'salary adjustment' of -£176.90 and total payments (before tax) ending up alot lower than my basic pay.

I contacted the payroll dept, and they say its something the government allows them to do so i don't get taxed as much.

but the way i see it, they are taking money away from me that i have earned even before i get taxed. so just basic pay and taxed 20% i should be getting paid £306.80, if we were to exclude expences.

have i missed something????

many thanks

Oldernotwiser

Your calculation doesn't seem to include a sum for NI which is why you are expecting too much money..

meme86

the thing i'm concerned about is 'salary adjustment' of -£176.90 from my basic pay

Russe11

Sounds like they are paying you through a third party company, usually done to take away many right you would have as a employee.

bigfatface

Do you pay into a 'salary sacrifice' pension scheme?

meme86

bigfatface wrote: »

Do you pay into a 'salary sacrifice' pension scheme?

no i don't

Gordon_Hose

"I contacted the payroll dept, and they say its something the government allows them to do so i don't get taxed as much."

You should ask them to elaborate.

GilbertGradgrind

At a basic of £383.50 you would earn £19,942 per year (before tax).
If the £176.90 adjustment were to be consistently applied over the year you would earn £10,743 per year (before tax).

The Revenue site suggests the BR1 Tax from 383.50 would be £76.60 per week for a first week in November with no previous, relevant, earnings this year.
(http://payecalculator.hmrc.gov.uk/PAYE1.aspx)
This only calculates your Income Tax Liability

The Revenue site suggests the BR1 Tax from £206.60 (the amount £383.50 - 176.90) would be £41.20 per week for a first week in November with no previous, relevant, earnings this year.
(http://payecalculator.hmrc.gov.uk/PAYE1.aspx)
This only calculates your Income Tax Liability

So the £51.83 could be Income Tax plus National Insurance (£41.20 Income Tax + £10.63 NI).

Having made an adjustment of £176.90 and expensed back £131.97 there is an amount of £44.93 that is not explained.

It appears that the adjustment is taken out of your salary before you are paid to reduce the tax liability from £76.60 to £41.20. If this is what the Employer has agreed with the Revenue then this is a reasonable and tax efficient way to ensure an employee retains as much earnings as possible.

This leaves an apparently unexplained amount of £44.93 that does not appear to be returned to you or presented to the Revenue. When you ask them to elaborate, you might wish to have a particular explanation of that amount of £44.93. That amount might actually be explained by using the HMRC calculator with your year to date earnings. You should be able to obtain all the detailed figures for that from your P45 and P60.

As an aside: when you have five pay slips, pop along to your local Revenue office with proof of identity (something photographic and some utility bills) and discuss if you are entitled to Working Tax Credit. You do need to go to the Revenue in person to present proof but you can check if you are eligible on line (http://taxcredits.hmrc.gov.uk/Qualify/DIQHousehold.aspx) which should help.

You might want to ask the Tax Officer to explain your payslips to you at the same time: they are quite good at it.

You might also wish to divide your weekly wage by your weekly hours. Do this after the adjustment is applied. This will tell you your effective hourly rate. It should be at least the amount given for your age group (http://www.direct.gov.uk/en/Employment/Employees/TheNationalMinimumWage/DG_10027201) The calculation should be done after the adjustment is applied as expenses are separate to wages unless the Revenue determines that you have been given "excessive" expenses. If you are getting less than minimum wage and it is being made up by expenses then you might want to consider what you wish to do about it.

For a very much simplified "am I being ripped off" calculation, you could try the workwise tax calculator (http://www.worksmart.org.uk/tools/tax_calc.php) which is provided by the TUC. This calculation is very much simplified and might not suit your particular circumstances.

The workwise calculation would suggest you might be better off being taxed on your full earnings without the avoidng measure of the salary adjustment. A major problem with that is that it would raise the tax burden on your employer. Employers pay national insurance contributions quite separate from employees and would seek to minimise the amount of NI that they pay.

It does appear that your deductions are perfectly legal but not as clearly explained as they ought to be. You might be best getting the payroll person to explain all of the deductions clearly and, again: apply for Working Tax Credit if you are entitled to it.


Addition:
There has been a judgement which goes against a request for judicial review - made by Cordant - that seems to suggest that any deductions, for "expenses", from National Minimum Wage is unjustified. Cordant claimed otherwise.

(CO/10670/2010 The Queen on the application of Cordant Group Plc v Secretary Of State For Business Innovation And Skills Before Mr Justice Kenneth Parker December 30th 2010). Cordant were refused the right to appeal. So, it seems that on January 1st the following Regulations will apply:

These draft Regulations amend the National Minimum Wage Regulations 1999 (“the NMW Regulations”) to provide that payments by an employer for travel expenses to a temporary workplace which are eligible for tax relief do not count as pay for National Minimum Wage (NMW) purposes.

The draft Regulations will come into effect on 1 January 2011. The draft Regulations have been laid with an Explanatory Memorandum (EM) and an Impact Assessment (IA).
Merits of Statutory Instruments Committee - Draft National Minimum Wage
(Amendment) (No2) Regulations 2010Which I would interpret - like HMRC - to mean that you can not be paid less than minimum wage even if you are made up beyond minimum wage by "expenses".


http://www.bbc.co.uk/news/business-12095128

meme86

GilbertGradgrind, you have been more than a huge help

i hadn't even thought about working out what they are paying me p.h (which works out 19p BELOW nmw)

getting someone we know just to look over it fully before things move on

Googlewhacker

All earnings are before tax but I presume you have calculated your hourly wage after tax so even though it is below NMW it is fine.

meme86

before tax

what i calculated was 'total payment' £338.57 (which is before tax) and divided by 59 (my hours)