NEW Tax Code

mardiemare2008

Hi guys,
just wondering if someone could help explain things to me as not really got a clue when it comes to tax.

I have today received a letter from HMRC saying I owe them £425.11?! My tax code is changing from 944L to 793L. The letter states they are going to deduct £2125 from my £10060 personal allowance for 2014/2015.

Question's are:

1)

How is it possible to underpay tax when I am employed full time and not self employed?

2)

Is there anyway I can contest this?

3)
I earn about £17,141 & pay £80 per month into salary sacrifice schemes. Is there anyone that is smart enough to work out how much less I will have on my wage? I currently pay around £100.80 PAYE and £77.55 in NI contributions per month.

p00hsticks

mardiemare2008 wrote: »

1)
How is it possible to underpay tax when I am employed full time and not self employed?

2)
Is there anyway I can contest this?

3)
I earn about £17,141 & pay £80 per month into salary sacrifice schemes. Is there anyone that is smart enough to work out how much less I will have on my wage? I currently pay around £100.80 PAYE and £77.55 in NI contributions per month.

1) The most common reason is that you receive some sort of taxable benefit in kind from your employer - the most common examples are private health insurance or a company car. Did you receive a P11D form from your employer last year (probably around May/June and if so what was listed on it. What does the HMRC coding notice give as the reason for the change in tax code ? (I note you mention a salary sacrifice scheme - has this only jsut started ? )

2) yes- contact HMRC if you believe the information on which they are basing the change of tax code is incorrect.

comeandgo

£2125 at 20% is £425 over the year and £35 .40 per month less pay.

chrisbur

mardiemare2008 wrote: »

Hi guys,
just wondering if someone could help explain things to me as not really got a clue when it comes to tax.

I have today received a letter from HMRC saying I owe them £425.11?! My tax code is changing from 944L to 793L. The letter states they are going to deduct £2125 from my £10060 personal allowance for 2014/2015.

Question's are:

1)

How is it possible to underpay tax when I am employed full time and not self employed?

2)

Is there anyway I can contest this?

3)
I earn about £17,141 & pay £80 per month into salary sacrifice schemes. Is there anyone that is smart enough to work out how much less I will have on my wage? I currently pay around £100.80 PAYE and £77.55 in NI contributions per month.

1 No one can answer this unless you give the full details
2 Possibly depending on what the full details are.
3 944L to 793L would increase tax by just under £25 a month if applied on a month 1 basis which hopefully it will be, should be confirmed on the letter somewhere. £2125 from allowance will collect £425 tax in the year. Not sure about the figures you have given the gross tax and NI do not appear to match can you give full details of last payslip including year to date figures.

mardiemare2008

p00hsticks wrote: »

(I note you mention a salary sacrifice scheme - has this only jsut started ? )

I have 2 Salary Sacrifice Schemes - One is my pension which has recently changed from a normal pension to a GPPP (Or something like that). The other is a 'Holiday Plus' Schemer (Where I can purchase extra days holiday from my employer) - But I have been doing this for years. I also pay into my Share Incentive Plan £55 per month, but again I have done this for nearly 3 years.

They are the only things - I do not get any more 'benefits'. I am saving for a house deposit so £35 per month makes a difference. I am due to get a performance related pay increase in April that I am really relying on and this tax code business has put a right downer on it


And I can't remember receiving a P11D.... it's not in my file (where things like that normally are)

mardiemare2008

chrisbur wrote: »

can you give full details of last payslip including year to date figures.

Last payslip for this months wage 23/01/14 shows

Earnings
Basic Pay: 1428.42
Holiday Plus: (38.35)
GPP EES Sal Sac (42.82)

Deductions

PAYE: £100.80
NI A: £77.55
SIP: £55 Unison £11.50

tax Paid YTD £1371.00
NI Paid YTD: £992.43

Taxable Pay YTD: £14730

zygurat789

mardiemare2008 wrote: »

Hi guys,
just wondering if someone could help explain things to me as not really got a clue when it comes to tax.

I have today received a letter from HMRC saying I owe them £425.11?! My tax code is changing from 944L to 793L. The letter states they are going to deduct £2125 from my £10060 personal allowance for 2014/2015.

Question's are:

.

Sometime up to 5/4/13 you have not paid tax on £2125 of your income.
The reason(s) for this should be apparent and/or explained on a P800 form which shows for each year your income, allowances, taxable income, tax due and tax paid. If you have this form for 2012/13 and previous years if applicable have a look and if you don't understand the contents ask the questions.
According to your payslip you are currently on the normal tax code of 9440
with no allowance for and pension payments. Your P60 figures of Taxable gross tax deducted and code number would also be very useful.

tamlem

Have you changed jobs in the last few years? My husband works for the NHS, that is his sole employment and his tax is paye.

He moved to another job in another nhs area in 2011 and about a year later was informed by hmrc that he had underpaid quite alot of tax and that they would take it back from his 2013-14 coding. He called and was told that there had been a mistake by his new employer when he moved jobs but he was still liable because he should have checked his tax. He had actually moved to a slightly higher paying job, but had cut his hours by a fifth so his income had changed alot anyway and we just assumed that they had sorted it all correctly. It wasn't as if he had been put on BR we'd have noticed that!

Thank goodness we are now nearing the end of the underpayment restriction, it was quite a chunk each month, I often wonder if we should have fought it more but hmrc made us feel like it was a no brainer?

mardiemare2008

I started in My current Job in April 2011 before then I had a period of 2 months when I was unemployed. (I was made redundant in Feb 2011 then started current job April 2011).
I was on jobseekers allowance for this short time. Maybe that may have something to do with it? I think I might phone them tomorrow.

chrisbur

mardiemare2008 wrote: »

Last payslip for this months wage 23/01/14 shows

Earnings
Basic Pay: 1428.42
Holiday Plus: (38.35)
GPP EES Sal Sac (42.82)

Deductions

PAYE: £100.80
NI A: £77.55
SIP: £55 Unison £11.50

tax Paid YTD £1371.00
NI Paid YTD: £992.43

Taxable Pay YTD: £14730

I can now see where the tax and NI figures come from but that raises another question.
Assuming that this payment is for month 10 then the year to date tax is correct for 944L on a taxable income of £14730.
The monthly figures only work out correct for tax and NI if you deduct the salary sacrifice items ie
Holiday Plus: (38.35)
GPP EES Sal Sac (42.82)
and also the SIP £55 but not sure if that can be done as salary sacrifice.


This is as I understand it correct for the salary sacrifice items but not sure about the SIP. Is this a self invested personal pension SIPP or something else.
If it is an SIPP I must confess that I know nothing about these but a quick google suggests that tax relief is given by HMRC paying into the pension and there is no mention of NI reduction.
Does anyone with more knowledge of SIPPs know if they can be treated as salary sacrifice items?
EDIT
All is now explained (post 11)not an SIPP but a share incentive plan which is correctly being paid for before deduction of tax and NI.


Regarding the tax owed full details of that are needed before any explanation can be given.

mardiemare2008

It is not the SIPP (Pension SIP) it is just a Share Incentive Plan.

For the employee SIPs provide the opportunity to invest pre-tax salary in the company they work for and become a share holder
http://en.wikipedia.org/wiki/Share_Incentive_Plan

http://www.sse-sip.co.uk/welcome.aspx


I will phone HMRC tomorrow - as there is no mention when the underpayment is from