Did I pay the correct amount of PAYE tax last year?

pinkteapot

So, after the heart attack inducing bill of £2,600 for underpaid PAYE tax for 2010-11, I want to check whether I paid the right amount of tax for the tax year 2011-12. Just to avoid a similar situation a year from now.

Really simple case:

• Tax code 744L throughout the tax year in question.
• Sole source of income - one job, paying tax PAYE (no other jobs, no self-employment, no savings interest, nothing).
• No P11D (no tax owed on benefits).

P60 details:

Total gross income: £52,340
Tax deducted: £10,956

Assume my NI contribution details aren't relevant (?).

How do I go about checking that the tax figure is correct and that I haven't under/overpaid?

PlutoinCapricorn

Do you mean 747L?

The personal allowance for tax year 2011/12 was £7,475 so people with no special affairs will have been given a tax code of 747L.

pinkteapot

My tax coding notice, pay slips for the year and P60 all say 744L (definitely).

PlutoinCapricorn

This is turning into a tangled web!

Getting back to basics and taking things in small bites, the general Personal Allowance is the amount people can normally earn before paying tax. The Tax Code shows how much a specific person can earn before they start paying tax: for someone with no special affairs, e.g. no company benefits, no student loans or tax repayments, they should match e.g £7,475 PA is matched with the 747L tax code. The final digit is ignored.

Your difference is not very great: your specific PA is £30 less than normal. Did you get a coding notice around April 6th 2011? This tells you how the code is arrived at.

The way it works is that you subtract the specific personal allowance from your gross salary, compute 20% of the result to get the total tax you should be paying in the tax year and divide by 12 to get the monthly amount. The monthly amount should be shown on your payslips, the the figure on the P60 should be the total of all payslips.

Someone who is earning £52,340 (did this amount apply to the whole tax year from April 6th 2011 to April 5th 2012?) and has a code of 747L should thus have a taxable income of £44,865.

20% is £8,973. It seems that you have overpaid tax by £1,983 - could this be a repayment?

ceeforcat

Someone who is earning £52,340 (did this amount apply to the whole tax year from April 6th 2011 to April 5th 2012?) and has a code of 747L should thus have a taxable income of £44,865.

20% is £8,973.

I make it £10946 - thin you forgot the 40% above 35000 on the £44865

jamesbogiant

Yeah i got something similar telling me they had estimated my "other income" as £30. Not sure what my "other income" could be when I only have one source of income, but I couldn't be bothered to argue for the sake of £6.

PlutoinCapricorn

CfC is right - the higher rate does kick in at a certain point, which usually changes each year.

PinkTP, it seems that you HAVE paid the right tax - it was just a coincidence that the difference was close to the underpayment.

The rules for calculating tax are complicated, but it is good to learn how it is done, and get ahead of the game by working out what you think the figures for 2012/13 should be.

The question now remaining is, why is your tax code slightly different from the norm - could someone working on your company's payroll have typed 4 instead of 7?

pinkteapot

Thanks all. So long as I haven't underpaid by £2,600 again (not getting over it anytime soon ). So it's literally just a case of splitting my gross income down into the tax-free, 20% and 40% bands, calculating the tax in each band and adding them up? Somehow thought it would be more complicated than that.

Just doing this wouldn't have helped with the year I underpaid. Per my other thread, I had a normal tax code giving me a tax-free allowance (this code was on my P60) but because a bonus sent my total earnings for the year over £100k, I should have lost my allowance. If I'd checked the P60 alone, I would have come to the conclusion that I paid the right amount anyway and still had the shock later on.

Re the tax code, the coding notice informing me of the 744L is at home - I'll check later and see what it says in terms of how they arrived at it.

PlutoinCapricorn

Yes, slice it up like a sausage!

Perhaps other people will read this thread and find it helpful. The higher rate bit does not seem to apply to many people though - I had forgotten it existed!

I assume that there was no chance that you could escape the other payment on the grounds that HMRC had all the information at the time?

pinkteapot

I looked into the A19 thing at the weekend but don't think I qualify because:

(1) I didn't receive a P800. HMRC asked me in July this year to complete a self-assessment for 2010-11, which I did. As I understand it, completing a self-assessment means you take liability for any tax owed.

(2) It relates to the year ended April 2011 and they asked me for the return in July 2012. From what I read, they have to raise the issue with you within a year of the end of the tax year following the one in question (so for 2010-11, they have until April 2013 to raise any problems).

twig1_2

Have you paid the underpayment as one sum or is it going to adjust your coding in future years ? If it is going to be adjusted in your coding they haven't caught up with it yet . You may get another coding notice to adjust for the underpayment.
If the underpayment arose due to a one off end of year bonus which HMRC couldn't have known of I can't see why anyone can be advising you that you can dispute it and say it is the HMRC's fault.
It's pretty dangerous asking advise on here as you have already seen some people are not qualified to give it you.