change in pay structure has left us short

witchy1066

sorry for delay have been waiting for wages clerk to explain

Chrisbur.. month 8 gross pay £462
tax £100.60p
NI £61.32p

tax code is 791L

gross pay to date including month 8 = £5144
gross tax to date = £153.20p
gross NI to date = £98.58P

wage clerk insists this is correct , his reason is "tax and NI is calculated differently when changing pay date or period, a shorter period appears to generate a higher rate in a shorter time"

does that make sense , I could except it if it was just the tax as that usually sorts itself out but for the NI to be so much doesn't make any sense whatsoever,

no week number it just has month 8 , pay dates 19/10/13 to 10/11/13

would appreciate any input you might have

witchy1066

Jonboy, no company has not changed
software wages use is rti same as when being payed monthly

the only reason I know this is because my partner asked wages clerk if he was using the correct software

thank you for your input

chrisbur

witchy1066 wrote: »

sorry for delay have been waiting for wages clerk to explain

Chrisbur.. month 8 gross pay £462
tax £100.60p
NI £61.32p

tax code is 791L

gross pay to date including month 8 = £5144
gross tax to date = £153.20p
gross NI to date = £98.58P

wage clerk insists this is correct , his reason is "tax and NI is calculated differently when changing pay date or period, a shorter period appears to generate a higher rate in a shorter time"

does that make sense , I could except it if it was just the tax as that usually sorts itself out but for the NI to be so much doesn't make any sense whatsoever,

no week number it just has month 8 , pay dates 19/10/13 to 10/11/13

would appreciate any input you might have

The so called explanation from the wages clerk makes very little sense to me. There can be what appears to be extra tax when you change pay periods but nothing like this in the case of monthly to four weekly. The figures at the moment do not make a lot of sense.
If we start with the month 7 we have a gross to date of 4682.00 which with a tax code of 791L would give a freepay (that is the bit you do not pay tax on) of 4619.44. Take that away from 4682.00 and you have £62 on which tax is due which at 20% is £12.40 not £52.60.
When you switch to 4 weekly pay you then are taxed as a weekly paid person but using the freepay for every fourth week. So for a payment made up to or including Nov 15 the freepay to be used would be week 32 (this would be the eighth four weekly payment of this year) so gross to date 5144 less week 32 freepay of 4873.60 gives taxable pay of 270 which at 20% is £54 not £153.20. The tax due to be paid from the first four weekly pay would be £54 less the £12.40 paid so far to month 7 or £41.60.
This is higher than you would expect due to the overlap of tax allowances when you change from monthly to four weekly but nothing like the amount that you have been taxed.
One possible explanation for the month 7 difference is that the tax code is being applied on a non-cumulative basis but this does not account for the tax on the last payslip.


The NI is even stranger. First what should happen when you change pay periods the new pay period should be applied from the first new wage. From the employers guide CWG2 at
http://www.hmrc.gov.uk/guidance/cwg2.pdf
from page 9
"Change of pay interval to a shorter interval
If the interval between the payment of an employee’s
earnings changes to a shorter interval, for example,
monthly paid to weekly paid, take the following action.
For NICs purposes
Work out NICs from the first payment after the change
based on the new earnings period. Do this even if the first
weekly payday falls within the same tax month as the
previous monthly payday."


Even if they treated it as a second payment in the same month the NI would not be as high as they have it and this would be wrong anyway.


It might throw a bit more light on it if you could list month by month for this tax year ie from month 1 payslip the gross tax and NI along with the tax code. Also is there anything on the payslip after the tax code eg non-cumulative, X,month1.

witchy1066

thank you Chrisbur,

nothing after his tax code ,

tax code hasn't changed since month 1, this is the correct code, I have checked with his code notices,

what is worrying us is that the wage clerk seems to think its all ok and its because of the change over,

how can tax and NI be worked out differently when a change of pay period is introduced , he pays tax under PAYE not pay more as you earn less

it really doesn't make sense does it , wages are saying no mistake has been made what can we do ?

its my partners money not theirs

we are worried it will happen again next month, we will really struggle, if it does

its not the tax he has paid up to month 7 that concerns us at the moment but the tax and NI he has paid on month 8 is a real concern,

thank you so much for your help ,

I will see look at his wage slips for tis year and total them myself , see if the numbers add up

chrisbur

With regard to tax when you change from monthly to four weekly. I gave figures for a change from month 7 to week 32 which produced an apparent increase in tax though not as great as you had on the pay slips. To understand you need to know how tax is worked out this may seem obvious but it is not. Each payday your total earnings to date are taken and the tax due to date is worked out, from this is deducted the tax paid so far up to the last payday and the difference is the tax due on that payday.
So to be specific in month 7 you take the total gross and deduct 7/12 of the yearly tax allowance and 20% of the difference is the tax due at that point. Then you move to week 32 and take the total gross and deduct 32/52 of the yearly tax allowance and 20% of the difference is tax due to date. Deduct from that the tax due at month 7 and you have the tax due for that payday. Problem is that month 7 has used 7/12 of the tax allowance which is the equivalent of 30.33 weeks leaving only 1.66 weeks tax allowance left for that week 32 payment though you are getting about 3 weeks' wages. Over the year you are getting just over 53 weeks wages but only get 52 weeks tax allowance it is the tax due on the extra wages that push up the tax due on the first changeover wage.
None of this really applies here as these figures were not used.
Tax will eventually be corrected you can check it at year end and get a refund if overpaid, but NI does not work like that.


All I can suggest is that you contact HMRC regarding tax and NI.
If you would prefer not to put figures up on the site you are welcome to PM them to me to check over.

witchy1066

oh thank you I will do that tomorrow, if your sure you don't mind,
I didn't expect you to spend so much of your time but it is really appreciated

yes I do realise the tax will be sorted but was more worried in case it happens again next month

apparently this wage clerk is too clever to make mistakes , but as he only comes in to do the wages (he is self employed) we feel he isn't really interested , and we are almost sure he is out of his depth but how do you tell this to your boss without any proof

will message you tomorrow with all the details
once again Thank You ,