Tax code change question

boring1

Hi
I am sorry if this is a really stupid question - but I can't get my head around it!

Tax code of 997L from April - November
December it drops to 548L and the same for Jan and Feb.

Phoned HMRC it was their error resulting in me having paid approx £447 too much tax.

Advisor said code for the final month of the tax year (march) will be 997L and that will take care of the overpayment.

In my mind the code for march has just reverted back to what it should have been all along - so how does that include the overpayment?

Sorry but I just don't get it!!

Thank you

chrisbur

boring1 wrote: »

Hi
I am sorry if this is a really stupid question - but I can't get my head around it!

Tax code of 997L from April - November
December it drops to 548L and the same for Jan and Feb.

Phoned HMRC it was their error resulting in me having paid approx £447 too much tax.

Advisor said code for the final month of the tax year (march) will be 997L and that will take care of the overpayment.

In my mind the code for march has just reverted back to what it should have been all along - so how does that include the overpayment?

Sorry but I just don't get it!!

Thank you

Provided that the tax code is applied on a cumulative basis it will correct for tax over-deducted in the this tax year.
A cumulative tax code calculates what tax is due on all your earnings up to the date of payment and deducts what you have already paid to get what is due that month. So applying it on the last tax month will work out what is due for the whole year and deduct what you have paid as at month 11, the difference will be the tax due or if you have paid more at month 11 than is due at month 12 the difference will be refunded to you.

boring1

ok, so will I be bringing home more money in my March pay packet?

molerat

Yes, the tax overpayment will be refunded into your pay.

agrinnall

boring1 wrote: »

Sorry but I just don't get it!!

Correct! But hopefully you have a better idea now chris and molerat have explained.