Tax Code - How to work out if I have paid correct amount?

CLAPTON

asssuming we are talking about tax year 2006-7?

then it should work like this

income 24,863
tax free 3081
leaving 21,782
10% tax 2150 so tax to be paid 215
leaving 19,632 to be taxed at 22% which is 4,319

so total tax should be 4,534 but you say you were taxed by 4370 which in fact seems too low based on the tax code.

Which I dont understand unless there is something else ... is all the pension payment paid gross or maybe you are paying into a AVC after tax ?

Hoddie_2

The calculation you need is in my post above. You need to ignore the coding notice (other than the figure of any underpayment they were collecting). Codes are issued in order to collect the right amount of tax, but there is no guarantee that they do - particularly when you have company benefits (the figures included in the code are often estimates based on the latest information given to HMRC).

To work out whether you've paid the right amount of tax, you will need your P60, P11D and the figure of underpayment they were collecting this year.

Financial_Savvy

Thanks Hoodie.

I have asked for the P11D at work, as soon as I have the figures I will update.

Everybody's much appreciated.

Thanks

Financial_Savvy

Everybody's HELP much appreciated.

Financial_Savvy

P11D cash equilivant is £1456.32

Still can't make the figures add up , can you guys help?

Thanks

kavomix

From my quick calculation you should have paid around £4424 in tax.

The reason you have underpaid is because for the first 9 months of the tax year you received personal allowance of 346L, then when your code was amended you started to receive personal allowances of 308L. so for 9 months of the year you had extra personal allowances.

How the tax system works is they break the personal allowance down in to weekly/monthly figures. So the first 9 months you were given £288 tax free in each monthly pay cheque. then when your code was amended the tax free amount you received each month was only £257. So this means for the first 9 months your received £31 extra tax free. which equals £279 overall.

Since your highest pay bracket is 22% this equates to £61.38 unpaid tax.
Now this figure is assuming your company amended your tax code for your month 10 pay cheque, and that you are paid monthly not weekly.


So comparing my tax figure of £4424 to your actual figure of £4370 the difference is £54, so the above calculation of £61 is close, considering I don't have all of your details to hand.

Financial_Savvy

Thanks every so much - I almost understand it now!

On the 346L code the car benefit was £1075 which was wrong, on the 308L code Ithe car beneift to £1456 which is correct and the vaule on the P11D.

Thanks again

kavomix

so what they done was amend your tax code as your car benefit was greater. However whenever they reduce a tax code they have to operate it on a week1/month1 basis because if they didn't then when the need code is operated it would take all the tax back that you owe and that months pay cheque would be much smaller.

I would assume that the amount you owe would be around the £60 mark. The tax office will contact you regarding this and will probably collect it during the 2008-09 tax year. Don't expect them to contact you regarding this until after November time. I personally would let them amend it through my code rather than pay it up front, as it works out better for you. rather than paying the £60 up front you pay it in segments over 12 months! So £5 each pay cheque