Tax code 547L

chaz411989

Hi everyone, hoping someone can help me out.

I noticed on my pay cheque that I had a tax code of 547L meaning my tax free allowance is £5470 instead of £10600. I can't quite understand why this is though. As I understand it, this change is because of a taxable employer benefit, but apart from money, my employer doesn't give me any benefits.

I graduated last summer and started working from September. As part of the contract I was given a "golden handshake" of £2k and on the payslip where this is listed, I paid no tax so feel it's because of this. That payslip had my tax code listed as 1060L.

Now, £2k is less than how much they've reduced my tax free allowance by (£3130 less!), and so over the course of 12 months that would mean I would be paying more in tax because I received this "golden handshake" than if that £2k was just added onto my basic salary (by the end of the financial year, I calculate that I'd be paying £365 more in tax because of this). So, does this mean I get to claim this back or do the government get to screw me over and apply the equation £2000 = £5470?

Also, if someone gets a larger bonus than £5470, do they benefit from this (i.e. does the government apply the equation £bonus value = £5470 no matter how large the bonus is?) or do they get their tax code reduced even further?

Thanks

Charlie

CLAPTON

chaz411989 wrote: »

Hi everyone, hoping someone can help me out.

I noticed on my pay cheque that I had a tax code of 547L meaning my tax free allowance is £5470 instead of £10600. I can't quite understand why this is though. As I understand it, this change is because of a taxable employer benefit, but apart from money, my employer doesn't give me any benefits.

I graduated last summer and started working from September. As part of the contract I was given a "golden handshake" of £2k and on the payslip where this is listed, I paid no tax so feel it's because of this. That payslip had my tax code listed as 1060L.

Now, £2k is less than how much they've reduced my tax free allowance by (£3130 less!), and so over the course of 12 months that would mean I would be paying more in tax because I received this "golden handshake" than if that £2k was just added onto my basic salary (by the end of the financial year, I calculate that I'd be paying £365 more in tax because of this). So, does this mean I get to claim this back or do the government get to screw me over and apply the equation £2000 = £5470?

Also, if someone gets a larger bonus than £5470, do they benefit from this (i.e. does the government apply the equation £bonus value = £5470 no matter how large the bonus is?) or do they get their tax code reduced even further?

Thanks

Charlie

when did you tax code change from 1060L to 547L?
did you receive a notice of coding?


the bonus should have no bearing on your tax code : bonus is just salary

in any event your tax code should be 1060L so phone up HMRC asap try 8am ish as you can often get through then

Linton

Your money isnt lost forever. The tax code system is based on an ongoing estimate of the tax due. The definitive calculation is done after the end of the tax year when all income is known. If appropriate, HMRC will send you a tax refund in due course.

agrinnall

My suspicion would be that they think you are also working somewhere else so have only allocated part of your personal allowance to your current job. Were you doing a different, perhaps part time, job while you were a student?

chaz411989

CLAPTON wrote: »

when did you tax code change from 1060L to 547L?
did you receive a notice of coding?


the bonus should have no bearing on your tax code : bonus is just salary

in any event your tax code should be 1060L so phone up HMRC asap try 8am ish as you can often get through then

On Septembers pay slip it was 1060L, but every payslip after that it has been 547L.

I didn't receive notice of coding, it was probably sent to my uni address as I assume they just go off what's on the electoral register. Incidentally, I received a tax rebate from previous years but they spelt my surname wrong on the letter and the cheque!

Probably will have to give them a call to sort this mess out!

Linton wrote: »

Your money isnt lost forever. The tax code system is based on an ongoing estimate of the tax due. The definitive calculation is done after the end of the tax year when all income is known. If appropriate, HMRC will send you a tax refund in due course.

YAY! :T

...although it'd be a lot easier if they just left my tax code the same. Hopefully they spell my name correctly this time!

chaz411989

agrinnall wrote: »

My suspicion would be that they think you are also working somewhere else so have only allocated part of your personal allowance to your current job. Were you doing a different, perhaps part time, job while you were a student?

I was but that was in a previous tax year. I did an open day for the university in September 2014 and got a tax rebate for that in September 2015 which I couldn't cash in for the previously stated reason.

Caz3121

chaz411989 wrote: »

I didn't receive notice of coding, it was probably sent to my uni address as I assume they just go off what's on the electoral register.

...although it'd be a lot easier if they just left my tax code the same. Hopefully they spell my name correctly this time!

they will use the information they hold for you until you let them know your new details https://www.gov.uk/tell-hmrc-change-of-details/change-name-or-address - it is a very simple process
They will not have changed the coding for fun so there is information they hold on you that means your code has been changed...this information may be correct but it may not be, you could update your details and ask for the coding notice to be resent which will explain the differences
Given that we are close to the end of the tax year this may not be able to be resolved in time for your final pay of the year, in which case any overpaid tax would be refunded after the end of the tax year