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Calculating employee tax / student loan deductions?
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baileywin
Posts: 56 Forumite
in Cutting tax
First of all - apologies if this in the wrong section.
I'm a bit sad and I've made an Excel spreadsheet to manage all my budget needs. Most of it works perfectly, but my salary is slightly (51p!) out and I can't work out why.
As of the 1st of April, I received a payrise to £24,000. The pay slip is dated 17/04/2014, tax period 2014-01, showing me being paid £2,000 for the month - so the whole period is calculated based on the new wage.
My wage is fixed salary, no overtime / bonus. I'm 22, not widowed etc so tax status should be very simple.
Of this payment, the deductions are as follows:
PAYE:
Pay slip says £233.00 (month) - £2796 a year
My tax code is 1000L, so:
0% tax on the first £10,000 - £0
20% tax on the remaining £14,000 - £2,800
£2,800 a year total income tax = £233.33 a month.
NI:
Pay slip says £160.44 (month) - £1,925.28 a year
I calculate exactly the same (to the penny)
Student Loan
Pay slip says £53.00 (month) - £636 a year
Student loans are 9% of anything above £16,910
£24,000 - £16,910 = £7,090
9% of £7,090 = £638.10
£638.10 per year = £53.18 per month.
In advance - I'm not complaining I'm being under or over paid to the tune of £6 a year - but I'm just curious as to why the amounts differ and what I'm calculating wrong!
Any ideas?
I'm a bit sad and I've made an Excel spreadsheet to manage all my budget needs. Most of it works perfectly, but my salary is slightly (51p!) out and I can't work out why.
As of the 1st of April, I received a payrise to £24,000. The pay slip is dated 17/04/2014, tax period 2014-01, showing me being paid £2,000 for the month - so the whole period is calculated based on the new wage.
My wage is fixed salary, no overtime / bonus. I'm 22, not widowed etc so tax status should be very simple.
Of this payment, the deductions are as follows:
PAYE:
Pay slip says £233.00 (month) - £2796 a year
My tax code is 1000L, so:
0% tax on the first £10,000 - £0
20% tax on the remaining £14,000 - £2,800
£2,800 a year total income tax = £233.33 a month.
NI:
Pay slip says £160.44 (month) - £1,925.28 a year
I calculate exactly the same (to the penny)
Student Loan
Pay slip says £53.00 (month) - £636 a year
Student loans are 9% of anything above £16,910
£24,000 - £16,910 = £7,090
9% of £7,090 = £638.10
£638.10 per year = £53.18 per month.
In advance - I'm not complaining I'm being under or over paid to the tune of £6 a year - but I'm just curious as to why the amounts differ and what I'm calculating wrong!
Any ideas?
0
Comments
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student loan is rounded down to the nearest pound0
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Perfect - thats the student loan reconciled
Just got the PAYE now...
I'm not an expert on payroll but HMRC allows the use of 'tables', so it is unwise to assume a calculation is necessarily used in the manner you assume
also rounding is used in calculations : I have never got my tax to be exactly correct even though I have one income that is taxed at BR (the tax is not exactly 20% of the income; less I'm glad to say)0 -
Perfect - thats the student loan reconciled
Just got the PAYE now...
PAYE has a couple of quirks.
First the tax allowance you are given works out at round about £10009 for code 1000L so for month 1 you get round about £834.08
This gives taxable pay of £2000 less ££834.08 = £1165.92
Second tax is then deducted on whole pounds only so £1165 divided by 5 = £233.00.
The odd pence are not completely forgotten it is the £1165.92 that gets carried forward to next month not the £1165.00 you paid tax on; so even on exactly the same monthly wage the odd pence build up and increase the tax by 20p every so often.0 -
Your monthly tax free amount from the tables used is £834.09 and tax is paid on whole pounds above that amount. In month 2 tax paid is 20% of the whole pounds remaining from (M1+M2 pay - M1+M2 tax free amount) less tax paid in M1 ........ and so on. I have fixed monthly pension payments and my spreadsheet gets it spot on.0
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Perfect - thats the student loan reconciled
Just got the PAYE now...
Your code number is 1000L denoting allowances of £10,000 but it would also be the code number for someone with allowances of £10,009.
Such a person would pay tax on £13,991 @ 20% = £2798.20 or £233.18 per month. Your PAYE is calculated by a computer program which will use roundings and I would expect your PAYE on your payslip to vary over the year.
Hint: to make yourself less sad and more happy, budget in round pounds.The only thing that is constant is change.0 -
Perfect!
I think putting this in my spreadsheet is a little too much trouble but at least I know overall it will balance out (pretty much) over the course of the year0
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