Robbed by the tax man

fizio

I noticed that when I got payed a large bonus in Dec, it seemed to be cancelled out by a similar amount of tax. This was different to what happened in 2012 and 2011 when i had a similar bonus.
Upon investigation I found out that my tax code had been set to MTH1 mid last year (when I went into negative allowance due to company car etc).
Apparantly when you have a MTH1 code and you earn more than £12500 then you get taxed at 45%. So I have been done for at the higher rate, even though over the course of the year I will not earn anywhere near the 45% tax rate - plus I have maximum pensions salary sacrifice to reduce my annual salary by £50k.
I did speak to my employer who said that I need to talk to the tax man and that if they remove the MTH1 coding then that should fix things. Tax man said that they won't be doing anything until after the end of the tax year but if P60 shows I have paid too much tax then they will refund.
So I'm 100% sure I have paid too much tax and if my bonus had been paid over 2 months I would have been below £12.5k and hence OK. It looks like there is not much that can be done until around P60 time but it all seems a bit harsh by the tax man as they can easily see my earnings apr13-Dec 13 and how I am barely at 40% tax nevermind 45%..
Just wanted to know if this all made sense and I had to wait it out..

purdyoaten

If all that is true and you are on the same code on a month 1 basis since the middle of last year, I would be having a word with your payroll department. Codes on a month 1 basis should automatically be changed to cumulative by the employer at the start of the tax year!

What you need to do before 6 April 2013

Employees without a new tax code

Carry forward the authorised tax code from the 2012–13 payroll record to the 2013–14 payroll record, but if you have
received a 2012–13 tax code on a form P6 too late to use in 2012–13 carry forward this code instead.

Do not copy or carry over any ‘week 1’ or ‘month 1’ markings.

zygurat789

purdyoaten wrote: »

If all that is true and you are on the same code on a month 1 basis since the middle of last year, I would be having a word with your payroll department. Codes on a month 1 basis should automatically be changed to cumulative by the employer at the start of the tax year!

I think the OP meant middle of last year , June/July 2013 within 13/14 tax year, not the middle of the last tax year.

fizio

purdyoaten wrote: »

If all that is true and you are on the same code on a month 1 basis since the middle of last year, I would be having a word with your payroll department. Codes on a month 1 basis should automatically be changed to cumulative by the employer at the start of the tax year!

What you need to do before 6 April 2013

Employees without a new tax code

Carry forward the authorised tax code from the 2012–13 payroll record to the 2013–14 payroll record,

but if you have
received a 2012–13 tax code on a form P6 too late to use in 2012–13 carry forward this code instead.

Do not copy or carry over any ‘week 1’ or ‘month 1’ markings.

interesting as I did ask and they were quite specific in saying - and I quote
"The "Mth 1" can only be removed by HMRC."

purdyoaten

haf63 wrote: »

interesting as I did ask and they were quite specific in saying - and I quote
"The "Mth 1" can only be removed by HMRC."

They are wrong I am afraid. I am correct if you meant mid-2012 and zygurat789 would be correct if you did mean mid-2013 (more likely I must admit)

http://www.hmrc.gov.uk/helpsheets/p9x.pdf

fizio

purdyoaten wrote: »

They are wrong I am afraid. I am correct if you meant mid-2012 and zygurat789 would be correct if you did mean mid-2013 (more likely I must admit)

http://www.hmrc.gov.uk/helpsheets/p9x.pdf

correct - I meant june 2013. I'll try our Payroll guys again

purdyoaten

haf63 wrote: »

correct - I meant june 2013. I'll try our Payroll guys again

No need as employer is correct if in current tax year. My fault for assuming that you meant mid-2012

fizio

thanks,
I'll hold off doing anything for now and hope the tax man works it all out after year-end

zygurat789

haf63 wrote: »

thanks,
I'll hold off doing anything for now and hope the tax man works it all out after year-end

Be proactive and contact him first, that way it may get done sooner.