Moving job mid year - tax issues

Pauleb80

I was fortunate to get a new job earlier this year that put me into the 40% tax band. I had only ever previously been on the lower band. So far I have received four payslips for complete months worked (Sept - Dec) however I am paying a different amount of tax each month. As you can imagine this is making financial planning very difficult. Is this normal in these situations? I'm hoping it will settle down from April but it looks like I'll have another few months uncertainty ahead (for info the tax paid is going up each month and is now more than what the online salary calculator predicted). Thanks in advance for any advice.

Merlin139

Did you get a P45 from previous employer and has that been handed to new employer?

Has your tax Code come across as correct? If it has then you will be paying the correct rate of tax.

Although you have not said it I would presume that the amount of tax you have paid over the last 4 months would have gone down.

Short of you saying what you have earn't so far this year and what your tax code is we cannot say how much tax you should have paid up to this point.

spadoosh

Assuming you never handed over a p45 then it will take upto a few months to get a relevant tax code applied.

Im guessing you started and was put on a BR tax code, maybe for a pay or two and then when it all caught up with it you went to a cumulative tax code which means your topping up what shouldve been paid in the BR months.

If you could provide earnings to date, tax paid to date and tax code youll get more accurate advice.

Pauleb80

Thanks. Other than the first month (which was in fact only a week) the tax code has been correct. I paid approx £300 less tax than I was expecting (based on salary calculator) in first two full months, this went down to £150 last month. For this month I have paid £50 more than I had originally expected. Therefore I'm still 'up' overall but just hoping to understand how it all works.

Someone mentioned the reason I paid less tax than I had expected originally was because I was only on the higher wage from end of August so based over the financial year I wouldn't hit the threshold immediately. That made sense at the time but doesn't explain why I'm now paying more tax than I had originally expected to pay.

getmore4less

Depends how you worked out the expected tax.

chrisbur

You will only get an accurate answer if you provide full details.

From the P45 Part 1A
Tax code and if X after it
Week or month number
Gross and tax figures both sets if two are on the P45

From each payslip
Tax code and basis
Week or month number
Taxable gross
Tax paid
Taxable gross to date
Tax paid to date
Previous gross
Previous tax

jenni_fer

The amount of tax due is worked out on a year-to-date basis, so it would make sense that you would pay less than 'normal' for the first few months as your YTD salary would have still be under the threshold/catching up.

agrinnall

jenni_fer wrote: »

The amount of tax due is worked out on a year-to-date basis, so it would make sense that you would pay less than 'normal' for the first few months as your YTD salary would have still be under the threshold/catching up.

That might be true if the new job was the OP's first job in this tax year. But as they had been working from the start of the tax year and simply switched jobs that isn't the case.

getmore4less

it can be

to make it simple ignore personal allowance and use a fake 20% band

1st job pays £18k(£1,500pm)
2nd job pays 36k(£3,000pm)
upto 24k is 20% overthat is 40%

switch at 6 months

total pay £9k total, 20% allowance is £12k so £3k to use up.

new job uses up 20% + £1k of the unused per month for 3 months then get 1k taxed at 40%

£300pm tax 1-6 £1,500 @ 20%
£600pm tax 7-9 £3,000 @ 20%
£800pm tax 10-12 £2000 @ 20% £1,000 @ 40%


if you use average pay £27k you get tax at £500pm

agrinnall

getmore4less wrote: »

switch at 6 months

total pay £9k total, 20% allowance is £12k so £3k to use up.

But that's not the way it works, you're making the mistaken assumption that the whole allowance is used up before tax is paid, but that's not so. Each month has it's own allowance, in your example £1000. So in each month basic rate tax would be due on £500 (£1500 gross pay - £1000 allowance). The full allowance can only be used up by the end of tax year unless the taxpayer informs HMRC that they are no longer working or they permanently leave the country.

I'm actually quite surprised that you don't know that given your otherwise wide-ranging and good knowledge of employment issues.

getmore4less

Thought it was obvious by ignore the personal allowance that those were the pay over that amount.


Seems not

In the example that pay is the pay over the personal allowance(which is ignored) for the example.

Monthly 20% allowance is £2k. £500 unused for 6 months that need to used up first in the following months.