Tax Code Question

mk_saver

Hi guys/girls, last month i noticed that my tax code had changed from a 495L (which is correct due to me having a company car) to a 647L. I therefore underpaid on tax last month. The original tax code of 495L has been the same all year up to now.

On a typical wage I usualy pay around £400 in tax

£200 is roughly what i underpaid in tax last month, i therefore phoned the tax office and they agreed that my code should not have been changed and would correct the matter. I have now recieved a new tax code 400L, however this month i have ended up paying £946 in tax.

Yes i did earn nearly £200 before tax extra this month but still cant get my head around why i should be paying more than double the tax as normal.

Can you guys please help or explain this a bit better to me???
Any extra info needed let me know


Cheers in advance

DVardysShadow

If you went from 495L to 647L, at this time of the year, that would give you about £1500 extra tax allowance in that month and £300 less tax. This month they need to recover that £300 and the taxcode going from 495L to 400L would take about £1000 further tax allowance off you, leading to a further £200 in tax. So I reckon you would see about £500 more tax than 2 months ago. These figures are approximations and slightly over because we are not quite all the way through the tax year.

Are you sure that the drop from 495L to 400L is correct?

mk_saver

1500 extra tax free allowance for the last two months of the year would mean i would have been paying £150 less a month? ie 300 less for the remaining year??

So my question is, if i underpaid in month 10 by approx 300, then informed the tax office. Would they not have changed my tax code so the underpaid tax was collected over the last 2 months? does it not seem as tho they have taken all of it if not more back in month 11?

In response to your question the start tax code was 495L then changed to 645L then changed to 400L.

Should my tax code go back to 495L next month????

DVardysShadow

£1500 extra tax allowance means you pay tax on £1500 less - ie £300 less at the end of the year - Not £150/month less. If you underpay in month 10 because the tax code is too low, and then the tax code is put to what it should be in month 11, the underpayment is recovered in month 11.

They should not drop your tax code to 400L to undo an error putting the code from 495L to 647L. They should just put the tax code to 495L to put matters right. I do not know whether they will put the tax code to 495L, which is why I asked whether 400L is correct. I suggest you sort this out urgently, because once month 12 is paid, any error must wait a month or 2 for HMRC to send you a cheque.