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Why have I been put on a non cumulative tax code?

l3mmmy
Posts: 33 Forumite
in Cutting tax
Hey all
I had a letter from HMRC last week to say they are changing my tax code from 1150L to 1143L X due to me now receiving medical insurance as a benefit. I've only ever been on 1150L so I'm a little confused and not entirely sure what a non cumulative tax code means other than my tax will be worked out equally over 12 months rather than working it's way up to my tax free allowance (if that makes sense?)
If I've got this right then surely as I've been working for the last few years a similar annual amount then it shouldn't really affect me as I've always paid tax. Is this correct?
My real question is, I get paid a different amount every month due to commission as I'm in a sales role. Will I suddenly be paying more tax?
Help please!!
I had a letter from HMRC last week to say they are changing my tax code from 1150L to 1143L X due to me now receiving medical insurance as a benefit. I've only ever been on 1150L so I'm a little confused and not entirely sure what a non cumulative tax code means other than my tax will be worked out equally over 12 months rather than working it's way up to my tax free allowance (if that makes sense?)
If I've got this right then surely as I've been working for the last few years a similar annual amount then it shouldn't really affect me as I've always paid tax. Is this correct?
My real question is, I get paid a different amount every month due to commission as I'm in a sales role. Will I suddenly be paying more tax?
Help please!!
0
Comments
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Non cumulative means what has happened earlier in the year is ignored and tax is calculated each pay day just looking at the salary for that pay day.
Much like how national insurance is calculated.
It often prevents tax owed from earlier in the year being taken all in one go from a single salary wage payment.
The most likely downside is if you earned over £45,000 annual equivalent in one month and monthly payment then reduced in later months. This is because you would pay some 40% tax in one month and not get it back automatically when salary reduced to less than £45,000 equivalent.0 -
If you have a cumulative code number your tax is worked out for the year to date taking into account what you have already paid since the beginning of the tax year.
When the code is reduced to collect extra tax a cumulative tax would work out what tax was due to date on the new code from the beginning of the tax year. This would mean you pay tax the total extra tax due back to the first month of the tax year resulting in a large tax deduction in one month.
By using a non cumulative tax code you are only asked to pay the increased amount for each month from now until the end of the tax year.
The extra tax due from April to date will be an estimated underpayment until the figures are reconciled after the end of the tax year.0 -
Putting a drop of only 7 points onto a M1 basis seems a bit petty and could make op, with a variable wage, considerably worse off than the single tax hit of a cumulative code.0
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OP are you sure that tax code is correct, have you had the official notification from HMRC as £70 does not seem like enough for any medical insurance I have ever seen, unless it is only dental?0
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