Questions about tax code

purdyoaten

Paratink wrote: »

Thank you.
I think the higher amount might have been calculated because most months I try to do some overtime.
Do you think it will be worth my while doing any overtime now or will it be too highly taxed to be worth my while?
Does this mean I will have a higher tax code next year too? I could try (again), before the start of the 2016/17 tax year, to negotiate with them to pay that back over the year at a rate of about £114.00 per month. Thoughts?
I really appreciate your help xxx

If you managed to earn enough to pay 40% tax on £6213, as HMRC hope, it will all be paid off by April 2016.

To do this you would need £34858* of earnings (31685-3040+6213). However, I wouldn't get excited - interest free loan and all that!

P.S. If you don't mind, I won't reciprocate your kisses!


* £34858 on previous code 1074L (1014L plus uplift) - tax payable £4823.60
£34858 on new code K304 - tax payable - £8822.20

Difference is £3998.60 - close enough.

Paratink

Ha ha no probs
I hope I didn't offend you!! Have I done something wrong?
I am quite a girly girl and tend to put kisses on the end of every thing - sorry

Paratink

Still don't understand whether it will be worth my while doing overtime or not - oh dear!!!!

purdyoaten

If you earn the £34858, the £4003 underpaid will disappear after a year.

However, earnings over £28645 will attract tax of 40% and NIC of 12%. So, overtime of £100 will have deductions of £52!

So, why break your back paying it off? By the time HMRC discover that you have not paid all of the underpayment off by April 2016 it could be two years from now! It could well be that you still owe £1400 or so - don't worry about it - there is no interest payable!

I was not offended in any way - I suspected that was the case!

zygurat789

Paratink wrote: »

Still don't understand whether it will be worth my while doing overtime or not - oh dear!!!!

I'm not sure I understand your dilemma. You have a debt to repay if you do overtime and repay your debt earlier this has to be good. If you do overtime and do not repay your debt earlier you have more money this also sounds good.

CLAPTON

purdyoaten wrote: »

I can't agree with that - or am I missing something?

If one earns £50000 on a code of 1000L, the tax payable is £7674.60

If the code is 800L - the tax payable will be £8474.60 - an increase of £800 - 40% of the 2000 restriction.

That is what HMRC take into account when doing coding adjustments. If they wish to collect an extra £1000, the restriction would be 2500 if HR, 5000 if not.

Edit - as op has now confirmed salary is below HR threshold (despite what HMRC say) - my previous post is somewhat irrelevant.

yes you are correct : I will delete my post

Paratink

zygurat789 wrote: »

I'm not sure I understand your dilemma. You have a debt to repay if you do overtime and repay your debt earlier this has to be good. If you do overtime and do not repay your debt earlier you have more money this also sounds good.

I guess you are right xx

purdyoaten

CLAPTON wrote: »

yes you are correct : I will delete my post

Happens to us all!

purdyoaten

zygurat789 wrote: »

I'm not sure I understand your dilemma. You have a debt to repay if you do overtime and repay your debt earlier this has to be good. If you do overtime and do not repay your debt earlier you have more money this also sounds good.

It is just that fact that the op would be paying HR tax and yet also paying full rate NIC that would annoy me - still - what can one do?

Paratink

Yes, and since I work for the NHS, part of my NI contributions will go to paying my own wages, in a sense. :mad: