Switching jobs - PAYE question

Crazy_Diamond

My husband moved to a new job with much higher pay in July and has just received a new tax code which states it is for the current tax year.

Can anyone tell me how this new tax code is applied? Will he have to pay backdated tax on the months April- June he was in his old job and was paying less tax. If so does this get taken out of his first months pay?

CLAPTON

Crazy_Diamond wrote: »

My husband moved to a new job with much higher pay in July and has just received a new tax code which states it is for the current tax year.

Can anyone tell me how this new tax code is applied? Will he have to pay backdated tax on the months April- June he was in his old job and was paying less tax. If so does this get taken out of his first months pay?

his tax code should be the same as before unless he has benefits in kind with the new job
the actual tax will depend upon the details but in general he will pay extra tax on the extra income: there is no reason why he should pay any more on his previous pay

chrisbur

Crazy_Diamond wrote: »

My husband moved to a new job with much higher pay in July and has just received a new tax code which states it is for the current tax year.

Can anyone tell me how this new tax code is applied? Will he have to pay backdated tax on the months April- June he was in his old job and was paying less tax. If so does this get taken out of his first months pay?

Difficult to give exact advice on the limited information given.
Tax codes can be applied in one of two ways, either from the start of the year or just on a month by month basis for the rest of the year (this is usually the case if the code goes down a lot). The tax code advice will tell you how it is being applied.

If you could give the old tax code and new tax code along with how it is to be applied along with earnings details could answer better.

Crazy_Diamond

Thanks for the replies. His old tax code was 690L and his new tax code is K373.

They have assumed he will be paid over £121,200 and have taken off reductions for medical insurance and child benefit.

It is however likely he will actually be getting around £100k unless he gets a bonus.

He latest payslip has just arrived and the tax was 49% of the salary so I was wondering if they had backdated the tax to the beginning of the tax year.

Crazy_Diamond

If I use the salary calculator here http://www.thesalarycalculator.co.uk/salary.php with his new tax code it says his tax should be £2,416. However he paid £4,124 in tax this month. Any ideas why this might be?

martinsurrey

Crazy_Diamond wrote: »

If I use the salary calculator here http://www.thesalarycalculator.co.uk/salary.php with his new tax code it says his tax should be £2,416. However he paid £4,124 in tax this month. Any ideas why this might be?

On his new tax code they have assumed he will not get any personal allowance.

August is the 5th tax month of the year, his personal allowance is taxed at 40% now, £10,000 @40% is £4000 or £333 per month, as his old job assumed he would have a personal allowance this new tax code, on a cumulative basis needs a 4 month catch up, which aco!!!!s for £1,333 of the difference in the calculator.

can we have more detailed info please?

booksurr

Crazy_Diamond wrote: »

Thanks for the replies. His old tax code was 690L and his new tax code is K373.

They have assumed he will be paid over £121,200 and have taken off reductions for medical insurance and child benefit.

It is however likely he will actually be getting around £100k unless he gets a bonus.

He latest payslip has just arrived and the tax was 49% of the salary so I was wondering if they had backdated the tax to the beginning of the tax year.

on that basis he will have his entire personal allowance totally removed
that will certainly be a part of why he has paid so much tax

Crazy_Diamond

Thanks, that makes sense. The online calculator at HMRC works better than the previous link I posted in case anyone else needs one http://payecalculator.hmrc.gov.uk/PAYE0.aspx

He is due to earn £102,510 this tax year. Can he just put an extra £3k into a pension to get his salary below £100k and then ask HMRC to change his tax code back to maintain his personal allowance?

xylophone

Can he just put an extra £3k into a pension to get his salary below £100k and then ask HMRC to change his tax code back to maintain his personal allowance?

http://adviser.royallondon.com/technical-central/information-guidance/contributions-and-tax-relief/60-tax-relief-on-pension-contributions/


http://www.aviva-for-advisers.co.uk/site/public/tech-centre/tech-article-detail/pensions-planning---contributions-and-preserving-the-personal-allowance

jem16

Crazy_Diamond wrote: »

He is due to earn £102,510 this tax year. Can he just put an extra £3k into a pension to get his salary below £100k and then ask HMRC to change his tax code back to maintain his personal allowance?

He should be able to do that. If he phones HMRC and gives them his estimated income minus pension contributions then they should be able to adjust the tax code.

However if he is also receiving taxable benefits he'll have to include that in his total income so it's likely to need a pension contribution higher than £3k.

MDMD

jem16 wrote: »

He should be able to do that. If he phones HMRC and gives them his estimated income minus pension contributions then they should be able to adjust the tax code.

This is true if he is paying into the pension from gross pay / salary sacrifice.

If he's paying into a personal pension outside work he'll need to give them the pension contributions amount so they give him the tax relief he's due.