Income Tax collected on refund?

Killmark

I started a new job after a few months of being a SAHD.

So far in the tax year I had earned £5459.61

I received a payslip today from my new employer showing the following.

BASIC PAY 1,916.67
BASIC PAY (Back Pay) 174.24

Then on deductions

Tax (Back Pay) -593.20
Tax 138.80
NI - A 157.76
Student Loans 75.00

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Taxable Pay YTD 7,550.52

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What I don't understand is why I have had £138.80 of Income Tax deducted if my tax code was 747L. Surely only only £75.52 on my pay is subject to income tax this month? Or have the calculated based on my end of year earning?

Does it matter that they pay 2 weeks in arrears and 2 weeks in advance?

Only way I could get a figure like that to add £593.20 as income.

Any ideas on whats going on?

Mikeyorks

The £7475 personal allowance is allocated monthly. At £623 per month. In order to keep your take home pay as level as possible, throughout the year.

But I'm not sure what the "Tax (Back Pay) -593.20" relates to?

This is the only calculator I know that works properly on an 'in year' basis. If you want to try it?

http://payecalculator.hmrc.gov.uk/PAYE0.aspx

Caz3121

If you work on PAYE, you pay tax throughout the year as you go. Although you have earnt £75 over your annual allowance, you do not earn tax free up to your allowance and then start paying tax
747 tax code would give you £623 each month before you pay tax on the rest.
Because of your months off work where you have not used your allowance you have been given a refund of tax in this pay period

chrisbur

Assuming that this is payment for month 11 you would have a tax allowance of 6855.75 (ie 11/12 of your annual allowance), if this is deducted from taxable pay of 7550.52 you would be due to pay tax on £694 which is 138.80.

This suggests to me that the 138.80 is your tax due to date figure and the 593.20 may be a tax rebate.

To clarify can you advise the net pay for this wage and give details of last month's pay?

Killmark

Mikeyorks wrote: »

But I'm not sure what the "Tax (Back Pay) -593.20" relates to?

This is previously paid income tax when I worked for a different employer.

Killmark

chrisbur wrote: »

Assuming that this is payment for month 11 you would have a tax allowance of 6855.75 (ie 11/12 of your annual allowance), if this is deducted from taxable pay of 7550.52 you would be due to pay tax on £694 which is 138.80.

This suggests to me that the 138.80 is your tax due to date figure and the 593.20 may be a tax rebate.

To clarify can you advise the net pay for this wage and give details of last month's pay?

I think your right.

Net Pay: £2,312.55

This is my first payslip

So income tax next month should be approx £261?

I was confused because normally I'd expect it to be £1,363.53 after deductions (and pension conts at 5%)

Mikeyorks

Killmark wrote: »

This is previously paid income tax when I worked for a different employer.

It's the 'Back Pay' notation that doesn't compute?

So income tax next month should be approx £261?

Yes. If the basic is consistent.

Killmark

Thanks for all the helpful information and explanations

:beer:

Now I know why everyone in my team was confused by their payslips.

chrisbur

This is a very strange payslip, in fact it actually appears to be two payslips (almost) that have been merged into one.

I would assume that the backpay element was earnings in your first month which could not be paid as the wages were already being processed so were carried forward to the next month. Under these circumstances it is correct to calculate NI seperately which is what has been done. The NI you paid is that due on £1916.67 and none has been deducted from the 174.24 as this falls below the earnings threshold. The tax would correct itsself if it had been done just on the total figure and given a tax rebate of 454.40 but they have shown it as seperate figures a rebate of 593.20 on the 174.24 wage and tax due of 138.80 on the 1916.67 wage. The student loan however has been treated as coming from only one wage the sum of 174.24 and 1916.67. Off hand I have no idea if this should have been treated like the NI and done seperately or not, but from your point of view it is not important, it does not look like you will earn over 15000 this year so when you get your P60 you can apply to get all you have paid this year back.

If however I am wrong in my assumption that this is a carry forward from last month that could not be paid then the NI may have been worked out wrong, but you are a few quid in profit so I would keep quite about it.