Multiple tax codes, new benefits, and first time in 40% - questions! (moved thread)

MartinSpoon

Let the P60 posts begin!

This year I had my first experience of not-so-straightforward tax, but as that is due to additional benefits I received for the first time, I'm certainly not complaining. However, I'm not clear on how I look at the information on my P60, and decide if I've paid enough (or too much) tax.

I can go through the numbers if it helps, but in summary;

I started with 747L.

I gained health insurance during the year, notified HMRC immediately, and was sent a new code 699L.

Later in the year I gained a company car, once again I notified them and was sent a new code 573L.

Now on my P60, I see I have just managed to creep into 40% territory.


So...

To calculate my total tax due for the year, do I only need to use my FINAL tax code, or some combination of codes? I tried a tax calculator with just the final code, and my income tax paid according to the P60 was about £70 under what the calculator produced.

As I have managed to move into 40% tax for the first time, does that have any other implications I should be aware of? E.g. on the company car?

I have no tax credits or any other forms of tax relief, but I do still pay student loan costs.

And finally... I received my code for 12/13 a month ago, which was 342L based on the car, the health insurance, and a correction for underpaid tax worth £357.44 (which they've based on the 40% rate, despite the fact that i still have some tax free allowance). I have no idea how that was calculated or where it is from - I phoned HMRC and they said not to worry about it, if it was an automatic calculation based on my 11/12 earnings, and if it was wrong, they would automatically correct it (hmm... )

Many thanks for any help or advice!!


Tax doesn't need to be taxing.. but our system makes it that way

CLAPTON

you use your last tax code

without the numbers from the P60 we can't comment

there's no particular issue with being in 40% tax but it does make paying more into a pension more attractive and you may be affected by the changes in the child allowances


presumably you now have a statement of benefits from your employer for tax year 2011-12 so you can check whether there was an underpayment or not (HMRC would have been estimating)

jem16

MartinSpoon wrote: »

To calculate my total tax due for the year, do I only need to use my FINAL tax code, or some combination of codes? I tried a tax calculator with just the final code, and my income tax paid according to the P60 was about £70 under what the calculator produced.

Final tax code should be used.

As I have managed to move into 40% tax for the first time, does that have any other implications I should be aware of? E.g. on the company car?

Company car is just seen as income so will be taxed in the same way. If some of your income goes into higher rate tax then you will pay 40% tax on it. However be aware that any interest from savings will need to be declared as extra tax may be due.

I have no tax credits or any other forms of tax relief, but I do still pay student loan costs.

Student loan doesn't enter into it.

Do you not have pay into a pension? That would reduce your taxable income.

correction for underpaid tax worth £357.44 (which they've based on the 40% rate, despite the fact that i still have some tax free allowance).

You said you had crossed into 40% tax last year so why would you still have some tax-free allowance?

MartinSpoon

CLAPTON wrote: »

you use your last tax code

without the numbers from the P60 we can't comment

there's no particular issue with being in 40% tax but it does make paying more into a pension more attractive and you may be affected by the changes in the child allowances


presumably you now have a statement of benefits from your employer for tax year 2011-12 so you can check whether there was an underpayment or not (HMRC would have been estimating)

Thanks. I'm already making high pension payments - maybe it's time for another boost.

I haven't received the statement of benefits yet, so I'll wait for that before I dig into the numbers too much further!

MartinSpoon

jem16 wrote: »

Final tax code should be used.

Thanks

Company car is just seen as income so will be taxed in the same way. If some of your income goes into higher rate tax then you will pay 40% tax on it. However be aware that any interest from savings will need to be declared as extra tax may be due.

Good.. for some reason I was worried that breaking into 40% imposed a sudden 'step change' in tax arrangements.

Do you not have pay into a pension? That would reduce your taxable income.

My pension contributions are made from Gross salary pre-tax, so I tend to just ignore this and work with the adjusted gross salary figure.

You said you had crossed into 40% tax last year so why would you still have some tax-free allowance?

I was half way through writing an explanation when I realised my error, never mind!