Low earner, unexpected bonus and suddenly paying tax

ktb

I know there will be a very simple answer to this but would love someone who understands it to explain it if at all possible.

I work part-time and earn £7200 a year for working 16 hours a week. So far this year I have paid no tax, NI or student loan repayments, however I unexpectedly received a £1000 bonus this month and this has obviously changed things.

My tax code is 945N as we are eligible for the married couples tax allowance.

My gross earnings YTD (inc bonus) are now £5496.19 but I have got the following deductions on my payslip this month;

PAYE: 186.80
NI: 126.72
Student Loan: £25

I am obviously confused as I am still well within my allowance and i'm nowhere hear the threshold for student loan repayments. Obviously the bonus has altered things for me - I just don't know if I will get any of this money back and should thing go back to 'normal' when I get my next payslip?

Thanks very much if you are able to shed any light for me.

Caz3121

It should sort itself out over the next month or so for the tax (assuming your tax code does not say M1 or similar beside it)
The NI is payable if you earn over a figure in that pay period so will not be refundable

ktb

Oh ok Caz, well my tax code does say M1 now I look carefully - what doest that mean?

ETA: ok I just googled that and see that they calculate it monthly - so does that mean it wont get adjusted?

booksurr

ktb wrote: »

Oh ok Caz, well my tax code does say M1 now I look carefully - what doest that mean?

ETA: ok I just googled that and see that they calculate it monthly - so does that mean it wont get adjusted?

it will not get adjusted until your tax code does not have M at the end of it

as you now know where the code is M it means the money you earn each month is taxed in isolation and no account is taken of anything you have earned before or, crucially, how much tax you have paid before. Therefore if your true cumulative position is you have overpaid tax and would be due a refund/adjustment, that will not happen whilst on a M1 code

only HMRC can change your code, your employer cannot do it for you. So you must contact HMRC asap and ask for your code to be updated

ktb

booksurr wrote: »

it will not get adjusted until your tax code does not have M at the end of it...... only HMRC can change your code, your employer cannot do it for you. So you must contact HMRC asap and ask for your code to be updated

wow ok... thanks so much! I will call them to discuss. That's so helpful, I appreciate it.

MichelleUK

The student loan will also not be refunded by your employer, but you may be able to claim it back from the Student Loans Company. Look at example 2 here:

http://www.hmrc.gov.uk/manuals/cslmanual/CSLM16030.htm

ktb

that's great Michelle thank you! Looks like i would definitely be eligible for a refund from them. Unfortunately their recorded messages says that my employer has to deal with it, which is a bit of a pain. Will try them again tomorrow, thank you!

jem16

ktb wrote: »

Unfortunately their recorded messages says that my employer has to deal with it, which is a bit of a pain. Will try them again tomorrow, thank you!

Your employer can't deal with it unless a new cumulative tax code is issued. The M1 tax code was probably issued when your tax code was lowered due to the Married Couples' allowance. HMRC often do this as it would avoid a larger tax bill in the month it was first used. However with your level of earnings it wouldn't have mattered so you're best with a cumulative tax code which you can ask HMRC to apply.

Best time to phone is at 7:45am.

CLAPTON

blondebubbles wrote: »

The M1 code has nothing to do with Married Couples Allowance.

M1 at the end of a tax code would mean non-cumulative.

I'm assuming you're thinking of the code letter being changed from L to M for the Marriage Allowance (which is different to Married Couples Allowance).

it appears that the OP's tax code is 945N M1

teddysmum

CLAPTON wrote: »

it appears that the OP's tax code is 945N M1

Quoting from a tax help site :


' The letter ‘N’ meaning that you are part of a couple and have given away 10% of your personal allowance to your partner; and the letter ‘M’ meaning that you have received 10% of the personal allowance from your partner'


'
Week 1 or month 1 codes

Week 1 and month 1 codes are described in detail on the Tax Codes for New Employees page. They can be applied as an ’emergency code’ for a new job.
HMRC may also issue you with a week 1 or month 1 code if it makes a very large change to your tax code during the year. Using a Week 1 or Month 1 code reduces the impact of the change – so that most of your pay for that pay-day does not disappear in tax. But this will also mean that the adjustment is likely to continue into the following tax year.
There are a number of reasons why HMRC might change your tax code during the year. For example, your circumstances may have changed – a new taxable benefit in kind, some untaxed income or state benefit, or an error earlier in the year.'


About half way down the page, from the blue link, M1 is clearly explained.

jem16

blondebubbles wrote: »

The M1 code has nothing to do with Married Couples Allowance.

M1 at the end of a tax code would mean non-cumulative.

Yes I know that. However what I meant was that when the change was made for the Marriage Allowance, an M1 code was also issued.

In the OP's case the suffix was N for reduced allowance but also followed by M1.

I'm assuming you're thinking of the code letter being changed from L to M for the Marriage Allowance (which is different to Married Couples Allowance).

Not entirely - I knew the suffix had changed from L to N in this case. However I did wrongly use the OP's term of Married Couples' Allowance instead of Marriage Allowance.