Employer not passing on tax free allowance increase

moneyuser

My net salary for april is going to be the same as march (I asked). According to listentotaxman salary tool I should get ~£25 extra. I take it this is due to the increase in tax free allowance and my employer is not passing this onto me. Can they do this?

I plan to see CAB when it opens on Thursday but has anyone got any advice in the meantime? I'm already looking for another job but not had much look over the last few months.

tizerbelle

It may well be they haven't twigged about the change in allowance yet. The tax year starts on the 6 April and so coding notices may not have been received / updated and you spoke to someone who doesn't know about the change. Also have you taken into account that NI contributions are going up at the same time?

Employers don't "pass on" tax allowances, it is your allowance and between you and HMRC. Employers just administer it. They don't get to keep it for themselves.

KiKi

moneyuser wrote: »

My net salary for april is going to be the same as march (I asked). According to listentotaxman salary tool I should get ~£25 extra. I take it this is due to the increase in tax free allowance and my employer is not passing this onto me. Can they do this?

I plan to see CAB when it opens on Thursday but has anyone got any advice in the meantime? I'm already looking for another job but not had much look over the last few months.

I'm not sure this is actually the case, and think that either you or your employer has misunderstood.

Your employer pays your salary - end of. How much you get NET is down to your tax code, which can be a result of *many* things, nothing to do with your job. For example, if you have income from shares, a second job, income from rental, tax overpayments etc.

Before you go rushing off to CAB, the *only* thing you need to check with your employer is: what is my gross salary next year? Assuming your gross salary is the same, then you have nothing to worry about.

Don't jump ahead of yourself, your employer can't 'keep' the additional £1000. I suspect they misunderstood you, and thought you were asking about your gross salary which - they're right - should be the same.

Ask them the question before you do anything else!

KiKi

Pete111

KiKi wrote: »

I'm not sure this is actually the case, and think that either you or your employer has misunderstood.

Your employer pays your salary - end of. How much you get NET is down to your tax code, which can be a result of *many* things, nothing to do with your job. For example, if you have income from shares, a second job, income from rental, tax overpayments etc.

Before you go rushing off to CAB, the *only* thing you need to check with your employer is: what is my gross salary next year? Assuming your gross salary is the same, then you have nothing to worry about.

Don't jump ahead of yourself, your employer can't 'keep' the additional £1000. I suspect they misunderstood you, and thought you were asking about your gross salary which - they're right - should be the same.

Ask them the question before you do anything else!

KiKi

+1

Your (gross) salary will remain the same, however the tax deducted from it may well change. This is nothing to do with your employer so don't go marching down to CAB just yet!

Gordon_Hose

Are you talking about the personal allowance rise in the recent budget?

BoGoF

The OP may be in the slighly unusual position where she agrees a net pay (a nanny for example), and the employer grosses this up for tax purposes and pays the tax over to HMRC. If this is the case and your contract is for £x a week/month net then as long that is what you are paid then I don't see what comeback you have.

moneyuser

Gordon_Hose wrote: »

Are you talking about the personal allowance rise in the recent budget?

Yes I am.

Slightly confused by the responses so far so I've done a bit more investigation and have some more questions.

I work for a a small company. I have no special arrangements regarding pay. I don't have any special share/pension/expenses arrangements etc. It is a standard basic salary.

1. No one has mentioned the listentotaxman website I mentioned. Is this site accurate or is there a government one I should use?

2. I have been looking into this personal allowance a bit more and have found out that in 08-09 it was 6035 and then 09-10 & 10-11 was 6475 and 11-12 will be 7475.

I'm pretty certain that means I should have had an increase in salary in the 09/10 year but the salary has been the same since 08/09. So for the last 3 tax years it has been the same, that doesn't seem right to me!

3. My tax code is 503l M1, which I understand this is an emergency code and means the personal allowance is 5035, which is from at least 06/07. I can't recall what my salary was at that time.

I believe my tax code should at least be 647l. Not really sure why I have an emergency code! Should I speak to hmrc?

4. Should my NET pay for April be higher than March?

Gordon_Hose

The full rise to £8,105 in the recent budget doesn't come into effect until April 2012. My tax code is currently 647L, you need to find out why you're on 503L, so speak to the HMRC as they are the ones that need to change it, not your employer.

Your "salary" doesn't rise or change (unless you've had a pay rise at work). The tax you pay is lower, which means your pay packet is bigger. So in theory your pay packet should be bigger, but if you're on 503L tax code still it won't change until you sort out why you're on the wrong tax code.

The listentotaxman website is telling me I'll be £75 better off. We'll see when my April wages arrive on the 25th.

KiKi

moneyuser wrote: »

Y
2. I have been looking into this personal allowance a bit more and have found out that in 08-09 it was 6035 and then 09-10 & 10-11 was 6475 and 11-12 will be 7475.

That is correct.

I'm pretty certain that means I should have had an increase in salary in the 09/10 year but the salary has been the same since 08/09. So for the last 3 tax years it has been the same, that doesn't seem right to me!

I think you're a bit muddled about how this works! Your salary (what you're paid) is *nothing* to do with your tax-free allowance.

If your salary is £20K and your allowance is £5k, then you have £15K which is taxed.
If your salary is £20K and your allowance is £3K then you have £17K which is taxed, which means you have less in each pay packet.

So you can see that the £20K salary is nothing to do with your tax-free allowance. Your pay packet (net salary) goes up and down if your tax code changes, but your gross salary (£20K) doesn't change. Does that make sense?

Your tax code - which indicates how much you get as a tax-free allowance - is not decided by your employer. It's something HMRC give you, according to your circumstances. Your employer pay your salary, and *don't* tax you on your tax-free allowance, whatever that is. But they go on what HMRC tell them it is, they don't decide it.

My tax code is 503l M1, which I understand this is an emergency code and means the personal allowance is 5035, which is from at least 06/07. I can't recall what my salary was at that time.

I believe my tax code should at least be 647l. Not really sure why I have an emergency code! Should I speak to hmrc?

It doesn't matter what your salary was at the time. What matters is that unless you have different circumstances than a standard individual working one job, with no additional income and no paid work benefits, your tax code is likely to be 647L. Which means you can earn £6475 before you pay tax. You are paying more tax than everyone else as your tax-free allowance is lower.

Yes, you need to speak to HMRC to understand why your tax code is what it is. This is why your employer will think your net salary isn't going up in April - they will assume your tax code isn't changing as it's not the standard one. This is not your employer's fault, or a problem they've created (as far as I know), so you don't need to go to CAB for this.

Should my NET pay for April be higher than March?

Your net salary will not change unless:
* You get a salary raise
* Your tax code goes up, meaning that you are taxed on less of your income

As there is no indication that your employer is giving you a raise, then no, your net salary won't go up in April. It will only go up IF, once you speak to HMRC, they decide you're on the wrong tax code and put it up to what will be 747L (meaning you have £7475 tax-free pay).

I hope this helps make sense of it for you. As it stands, your employer is correct and this is nothing to do with them. It's HMRC you need to speak to.

KiKi

moneyuser

Thanks for posting kiki.

When I say salary I actually mean NET pay. I understand that my gross pay won't change. I just used the wrong terminology. Sorry for the confusion.

I will speak to HMRC tomorrow and see what they say.

BoGoF

Your employer seems to not know how to operate PAYE correctly. You should not be on a month 1 code having been with them for a few years.