Tax code change...

castortroy31

Hi All,

I was wondering if someone could hep me at all.

I recently moved from my old tax code of 810L and then was moved to the 944l code from april 2013.

My understanding was that I would be paying less tax on the amount i get paid but then it appears that i am paying more tax! around about 8 % extra.

i queried this with my employer. I am a weekly contractor and they told me the following:


he was on 810 !!! which basically means he will get £156 of free pay before he is taxed. However it depends how much he earns because he may hit the higher threshold for tax the below are the threshold for the annual salary.



0-34370 would be taxed at 20%

34371-149999 would be taxed at 40%

150000 or more would be taxed at 50%



The new code for him should be 944L !!! but obviously his tax code may change if we receive a P9 for him. This means he has free pay of £182 before he is taxed.



The thresholds for the higher tax are then:



0-32010 would be taxed at 20%

32011-150000 would be taxed at 40%

150001 or more would be taxed at 50%



Also, as your holiday pay is paid at a lower rate than your daily rate (because it does not include WTD) your Gross pay was less and therefore the tax amount deducted was less. If you feel as though your tax code or deductions are incorrect I would recommend contacting the revenue directly.

Anyone have any idea? on the 810l code I have been on for about a year and then they move to the new one surely i should get paid the same or more since the threshold is now higher?

many thanks in advance.,

chrisbur

To see what is happening you will have to give more details.
Start with your last payslip that used the 810L code and advise taxable gross and tax from it, the tax basis (usually follows the tax code) and also the taxable gross to date and tax paid to date. Then from your first payslip on 944L the taxable gross and tax figure.

SuperHan

If you get paid more than £41,450 then you may be paying more tax (without doing the nitty gritty sums), as although more of your wage is at 0%, you are now a higher rate tax payer, so some of your wage will be taxed at 40% instead of 20%.

agrinnall

Your employer is wrong about the rate for earnings over £150K, it changed from 50% to 45% in April 2013. Although I suspect that's not the bracket you're in.

http://www.hmrc.gov.uk/rates/it.htm#2

castortroy31

SuperHan wrote: »

If you get paid more than £41,450 then you may be paying more tax (without doing the nitty gritty sums), as although more of your wage is at 0%, you are now a higher rate tax payer, so some of your wage will be taxed at 40% instead of 20%.

Ah i see...

Well it doesnt help me much does it that I have more tax free allowance now but the threshold has gone down?

okay heres a breakdown.

i get paid 1215 per week and normally take home after tax and student loan 749 per week but then the tax code changed and now am getting paid 698.

this only happened this year after april. previously i was paid this for 45 weeks approximately

agrinnall

I don't think that's right. Using http://www.thesalarycalculator.co.uk/salary.php and multiplying your weekly pay up to an annual value of £63180, and assuming your student loan is repayment plan 1 then your net take home for 2012/3 would have been £753.09 (so not far off the £749 you actually got) and for 2013/4 the figure should be £757.59. {NB this calculation is based on getting the same pay level for 52 weeks, so if you don't work for a full year or get paid at a lower rate for holidays then that may affect the figures}

What does your pay slip say about how much tax, NI and student loan are being retained?

castortroy31

Hi there,

yes that is what I thought as well.

okay for the new payslip its broken down as follows:

salary paid 1088 (money is taken out for my holiday pay...)
tax deducted: 239.68
NI contribution: 83.59
student loan 69

total deductions 392.27

For the old one:

salary paid 1088
tax deducted 186.86
NI 85.85
Student loan: 70.00

so its my paye tax right?

how can it change?

chrisbur

castortroy31 wrote: »

Hi there,

yes that is what I thought as well.

okay for the new payslip its broken down as follows:

salary paid 1088 (money is taken out for my holiday pay...)
tax deducted: 239.68
NI contribution: 83.59
student loan 69

total deductions 392.27

For the old one:

salary paid 1088
tax deducted 186.86
NI 85.85
Student loan: 70.00

so its my paye tax right?

how can it change?

We are getting towards the details that are required which I asked for in post number 2 but you have not given "....the taxable gross to date and tax paid to date...." for the old one from which £186.86 tax was deducted.

By the way the question we are looking at is not why did your tax go up with the new tax code but why was it so low with the old tax code.

castortroy31

chrisbur wrote: »

We are getting towards the details that are required which I asked for in post number 2 but you have not given "....the taxable gross to date and tax paid to date...." for the old one from which £186.86 tax was deducted.

hi there,

am sorry will get the info asap. you need the last payslip pre change in the tax code and the last payslip with the new tax code?

regards,

Cas

jem16

castortroy31 wrote: »

Hi there,

yes that is what I thought as well.

okay for the new payslip its broken down as follows:

salary paid 1088 (money is taken out for my holiday pay...)
tax deducted: 239.68
NI contribution: 83.59
student loan 69

total deductions 392.27

This one is correct as far as I would expect on a single week basis.

For the old one:

salary paid 1088
tax deducted 186.86
NI 85.85
Student loan: 70.00

so its my paye tax right?

This one is "wrong" as far as the tax is concerned but only if you take it in isolation on a Wk1 basis.

However as chrisbur has requested, we need to know the taxable gross to date and tax paid to date to see why you were paying less tax than would be considered normal.

how can it change?

Many reasons over the course of a tax year. It could be bonuses, overtime and a whole host of other reasons which may see your weekly wage varying.

agrinnall

We're certainly getting closer now, knowing that a deduction from gross pay for holidays has been made (looks like around 10.5%, is that right?) makes the figures for 2013/4 pretty much correct. Hopefully once you provide the extra information that chrisbur requested the calculation of the 2012/3 tax can be explained.