Incorrect tax taken ?

castle96

I got my code for this year reduced fron 1120L to 1001L (ie no tax payable.
My week 5 slip now shows this code, but tax taken is £32 (total to date £51.40)
Surely on 1001L I should not be paying tax ???

martinsurrey

castle96 wrote: »

I got my code for this year reduced fron 1120L to 1001L (ie no tax payable.
My week 5 slip now shows this code, but tax taken is £32 (total to date £51.40)
Surely on 1001L I should not be paying tax ???

what are your earnings?

1001L DOES NOT mean no tax payable.

Dazed_and_confused

How much have you earned this tax year according to your week 5 payslip?

If the tax code is being used on the cumulative way then 1001L means you will pay tax if your average earnings each week are more than about £192.

Tax of £51.40 at week 5 indicates you have been paid £1220 so far in the first 5 weeks of the year, which averages out at £244/week or £12688 per year

Bluebirdman_of_Alcathays

You will (assuming you have a realistic level of income) pay MORE tax on 1001L than you will on 1120L

castle96

£1220 earned at wk 5. I work for an Agency and will not earn > £10k for the year. I changed my earnings to this figure on the Gov.uk personal tax account site. They had previously assumed I would earn £15k.
It will all come out in the wash at the end of the year anyway, won't it ? Could be a little confusing as I am 65 in Feb 17

Dazed_and_confused

No, it wont all come out in the wash at the end of the year. If you are on a cumulative tax code then it will be correct each week (assuming the 1001L tax code is correct).

For example if in week 6 you only earn say £160 that will make your total earnings at week 6 £1380 - this now means an average pay of £230/week or £11960/year. At week 6 pay of £1380 on tax code 1001L would mean you owed £44.60 tax - as you had already paid £51.40 at week 5 you would get a tax refund of £6.80 in your week 6 wages.

If your average earnings ever drop to £192/week then you should get all of the £51.40 paid so far back (assuming your tax code remains 1001L)

Nothing will change just because you become 65 but if you start to get your State Retirement Pension then at 65 then your tax code should be altered as a result of getting the pension income

xylophone

I got my code for this year reduced fron 1120L to 1001L (ie no tax payable.
My week 5 slip now shows this code, but tax taken is £32 (total to date £51.40)
Surely on 1001L I should not be paying tax ???

https://forums.moneysavingexpert.com/discussion/comment/69795558#Comment_69795558 post 1

My paye income is likely (Agency work, so therefore I never know) to be £12 k (may end up as £13k). I currently pay no tax on this/nil code.

Has your tax code been reduced because you owe tax for a previous year?

The standard tax free allowance for 2015-16 was £10,600.

You become eligible for state pension in the current tax year 2016-17.

The state pension is taxable although paid gross.

You should check your tax position with HMRC when you draw your state pension.

castle96

ok thanks for the explanation. So each week it will 'correct' itself - good

agrinnall

castle96 wrote: »

£1220 earned at wk 5. I work for an Agency and will not earn > £10k for the year.

Could be a little confusing as I am 65 in Feb 17

Why won't you earn >£10K in the year? The evidence of the first 5 weeks certainly suggests that you will, are you planning to stop work and earn nothing at some point before your state pension starts being paid?

castle96

some weeks I work 1 day, some weeks 5 so < £10kpa