Work out tax half way through financial year

I_Love_Shoes

That sucks, I got a £150 bonus in December and the whole lot went to the tax man!
Will this even out at the end of this tax year then?

CLAPTON

I_Love_Shoes wrote: »

That sucks, I got a £150 bonus in December and the whole lot went to the tax man!
Will this even out at the end of this tax year then?

basically rubbish

but what totals are shown on your December payslip?

CLAPTON

00ec25 wrote: »

code 810 means you get £8,105 pa tax free ie £765.42 pm. The key to understanding tax is that it works on a cumulative basis, so the total earnings to date, less total allowance to date, gives the total taxable pay to date. This is then taxed at 20%. A tax code 810L iis how we know it's on a cumulative basis

However, where you change jobs, then if your new payroll dept do not get your P45 in time, then they must not operate the cumulative basis, instead they can operate a single month in isolation. This is why your Nov tax code is 810M (stands for month 1)

to show the maths of your case....

month 8 old employer total pay to date 9371.20 allowance to mth 8 (675.42x8) 5403.33 so taxable pay 3967.87 @20% = 973

you then started the new job in month 8 and the new employer used month 1 code so non cumulative ie taxable pay 1111.46 - 675.42 = 436.04@20% = 87

that is why you had the big jump in mth 9 tax paid - you should not have been given the 675.42 allowance by your new employer in mth 8 as you already had it from your old job. So in mth 9 the tax on that (675.42 x20% = £135) has been recovered on top of the tax you should pay on your mth 9 earnings (1566 per month means you would normally pay about 178 pm in tax)

so for mth 9 your total earnings to date are 12049.33, your allowance to mth 9 is 6078.75, meaning 5970.58 is taxable. 5970.58x20% = 1194.12. Cumulatively you have already paid tax of 973 +87 = 880.78 so in mth 9 you should have paid tax of 1194.12 - 880.78 = 313. (ie 178+ backtax of 135)

in reality in Dec you paid "only" 287, ie £26 underpaid, which is why we are saying that there must be some extra deductions going on, such as pension, which has reduced your actual taxable (not total) pay by approx £130 (130x20% = 26)

I know you are not paid to type but can I gently and with respect point out that you have transposed '7' and '6' in the first line of you excellent post

happy new year

I_Love_Shoes

total gross: 12245.47
gross for tax: 11918.57
tax paid: 1167.20
earnings for NI: 2540
NI: 153.12
Is that what you mean?

CLAPTON

why is there a difference between total gross of 12245.47 and gross for tax of 11918.57?

usually this mean a pension payment or salary sacrifice or expenses or something similar


but based on the 'gross for tax' then your tax is exactly correct

I_Love_Shoes

I have no idea. Ive only just signed up to a pension, but it hasnt been deducted yet.
Bloody tax man!!

Savvy_Sue

I_Love_Shoes wrote: »

That sucks, I got a £150 bonus in December and the whole lot went to the tax man!

As CLAPTON so eloquently says:

CLAPTON wrote: »

basically rubbish

I have some colleagues repaying student loans who always moan when they have backpay or overtime payments, because 'it's all gone to tax', but even if you had NOT had the bonus you would still have been paying more tax than you expected because you had underpaid in November.

Find one of the sites where you can put your own figures in (eg listentotaxman) and check out the effect of having and not having a bonus: you don't pay ALL of a bonus in tax, the bonus is taxed, is all.

I_Love_Shoes wrote: »

Will this even out at the end of this tax year then?

Should do, if nothing else changes.

chrisbur

I_Love_Shoes wrote: »

total gross: 12245.47
gross for tax: 11918.57
tax paid: 1167.20
earnings for NI: 2540
NI: 153.12
Is that what you mean?

That tax figure is spot on for that taxable gross, would suggest that you ask your payroll dept where the non-taxable gross bit comes from.

As far as your general problem is concerned this happens to some people when they change jobs, some people pay a bit to mutch and get it back later, some pay a bit to little and they pay it back later and for most it works out correct or so close that they do not notice the small adjustment later. The problem may be caused by a late payment or by different employers paying at different times but whatever the cause the ammount that you pay in tax for the year is not affected only how it is split between the paydays.

00ec25

CLAPTON wrote: »

I know you are not paid to type but can I gently and with respect point out that you have transposed '7' and '6' in the first line of you excellent post

happy new year

arrgh, thanks, that does deserve correction