Someone able to explain Income Tax/Tax Code

fd1972uk

Hi,

I have posted something relating to this in the marriage allowance, but having looked into it a bit further my head is totally frazzled and can't understand the HMRC information.

It relates to my wife, she was on £10010 per annum, no other source of income, therefore she paid no or minimum tax. Now last year she would have I assume been on 1060L, at a point last year, maybe around September we signed up for the Marriage Allowance tax relief. So my wife's tax code obviously changed, as did mine.

Come 1st April (last month) my wife's wage was going upto £7.20 and then after a word with her boss she was getting an increase to £8.00, so I called HMRC on 6th April and cancelled down the marriage allowance, my last wage on 28th had the correct change and the necessary tax deducted.

However my wife's tax code according to her payslip is S943N, phoned HMRC because of this they advised it was changed, my wife has not had confirmation herself, and after speaking today with her boss, neither have they.

I signed up online for her, and her tax code is S1053, and it says that she owes tax from last year????

I'm pretty confused as to how she can owe more tax, into the bargain she has been paying too much tax since the start of this tax year. She has had no increase outwith the one from last month.

Anyone any idea, sorry, but I'm not overly confident with the whole tax issue.


FD

chrisbur

In order to check and see what is happening you need to give taxable gross and tax paid for yourself and your wife as at the tax year end.

molerat

Has she had her P60 for last year, figures from this is essential to make sense.

xylophone

http://www.litrg.org.uk/latest-news/news/160225-are-you-scottish-taxpayer-your-tax-code-201617-%E2%80%9Cs%E2%80%9D-code

https://www.gov.uk/scottish-rate-income-tax/how-it-works

https://www.citizensadvice.org.uk/scotland/tax/income-tax-how-much-should-you-pay/income-tax-allowances-and-amounts/

http://www.moneysavingexpert.com/family/marriage-tax-allowance

The above might help.

sheramber

Personal allowance for 2015/16 10600
less transfer of marriage allowance 1060
balance of allowances left 9540

wife's income 10010 - 9540 = 470 liable to tax @20% = 94

Your wife's amended code would only collect the tax due from when it was amended so she will have an underpayment of tax for the period from April until then. Hence an underpayment included in her code number for 201/17.

if her employer has not received her amended code she should ask HMRC to issue it again.

fd1972uk

sheramber wrote: »

Personal allowance for 2015/16 10600
less transfer of marriage allowance 1060
balance of allowances left 9540

wife's income 10010 - 9540 = 470 liable to tax @20% = 94

Your wife's amended code would only collect the tax due from when it was amended so she will have an underpayment of tax for the period from April until then. Hence an underpayment included in her code number for 201/17.

if her employer has not received her amended code she should ask HMRC to issue it again.

:T

On the money. Managed to get through to HMRC and that's exactly it. Only little slight thing was she went from 954N to 943N, however I'd need to check exactly when that happened.

Her new code is S1053L to deal with the tax issue as you rightly said.

The only thing I'm slightly confused about is she owes £94 (around that mark) to the tax man for last year. I tried a rough calculation and looking at my salary from September (when it began) to end of year I benefited to £181.00 in tax. My wife who earned £10200 in the year was £63.16 worse off and yet still owes a further £93. Into the bargain she has been on tax code 954N from September and is currently now on 943N? I thought it would have at least went up in April, so seems to suggest either an earlier change possible? HMRC are saying it should now be S1053L. I have requested they resend back to her work ,as well as herself which she has never received either and since her wage increase at the start of April she's been taxed on 943N even though the allowance has stopped and I was taxed as normal.

Just seems a bit weird that someone who earns £10200, means in reality I gained a total of £25 better off in tax?



FD

Darksparkle

fd1972uk wrote: »

:T

On the money. Managed to get through to HMRC and that's exactly it. Only little slight thing was she went from 954N to 943N, however I'd need to check exactly when that happened.

Her new code is S1053L to deal with the tax issue as you rightly said.

The only thing I'm slightly confused about is she owes £94 (around that mark) to the tax man for last year. I tried a rough calculation and looking at my salary from September (when it began) to end of year I benefited to £181.00 in tax. My wife who earned £10200 in the year was £63.16 worse off and yet still owes a further £93. Into the bargain she has been on tax code 954N from September and is currently now on 943N? I thought it would have at least went up in April, so seems to suggest either an earlier change possible? HMRC are saying it should now be S1053L. I have requested they resend back to her work ,as well as herself which she has never received either and since her wage increase at the start of April she's been taxed on 943N even though the allowance has stopped and I was taxed as normal.

Just seems a bit weird that someone who earns £10200, means in reality I gained a total of £25 better off in tax?



FD

If in 2015/16 she earned £10,200 and had a personal allowance of £9540 (£10600-£1060) she'd be due to pay tax of £132.

As your personal allowance increased by £1060, you should have saved £212 tax so overall £80 better off for 2015/16.

fd1972uk

Darksparkle wrote: »

If in 2015/16 she earned £10,200 and had a personal allowance of £9540 (£10600-£1060) she'd be due to pay tax of £132.

As your personal allowance increased by £1060, you should have saved £212 tax so overall £80 better off for 2015/16.

Thanks, I'm guessing because it never started till September this may have an effect on the overall figure, but just as I said a bit confused about my wife's tax. Actually think I may have included a pension contribution from January, so in reality it's around £46 give or take overall saved.

I estimated her tax deduction of around £42 (maybe slightly more) and that would not include the £93ish that she owes the tax man. Also strange that she went from 954N to 943N as well at some point in the year. Wonder if that was maybe implemented on 1st April because of the tax owed.


FD

sheramber

Darksparkle wrote: »

If in 2015/16 she earned £10,200 and had a personal allowance of £9540 (£10600-£1060) she'd be due to pay tax of £132.

As your personal allowance increased by £1060, you should have saved £212 tax so overall £80 better off for 2015/16.

wife eraned £10010 not £10200

Darksparkle

sheramber wrote: »

wife eraned £10010 not £10200

Post 6 says £10,200

Darksparkle

fd1972uk wrote: »

Thanks, I'm guessing because it never started till September this may have an effect on the overall figure, but just as I said a bit confused about my wife's tax. Actually think I may have included a pension contribution from January, so in reality it's around £46 give or take overall saved.

I estimated her tax deduction of around £42 (maybe slightly more) and that would not include the £93ish that she owes the tax man. Also strange that she went from 954N to 943N as well at some point in the year. Wonder if that was maybe implemented on 1st April because of the tax owed.


FD

Has she received her P60 yet? Or does she have her final payslip for the tax year ending 5th April 2016?

This would confirm the total taxable pay, total tax paid and final tax code used.