income tax increase

omgimcrap

Hi
Despite an increase in my personal tax allowance like everyone else for the first 2 months of this financial year I am paying £85 a month more in tax.


In March last year I paid £376.07 in tax on a basic month. My tax code was 1164L


In April, I paid £461.40. this again was a basic month with exactly the same basic salary. My tax code is now 1199L


This is obviously a bit confusing!


My National insurable pay for 2017/2018 was £52,508.77 and taxable £47,927.79


Any idea's?


thanks


Tim

Nick_C

Have a look at https://www.thesalarycalculator.co.uk/salary.php

And if you need further info, the appropriate pages on the .gov.uk website

omgimcrap

Hi Nick thank you for that.


I have been to the site and it's not helping me to actually explain why I'm suddenly paying more tax when nothing else has changed.

chrisbur

omgimcrap wrote: »

Hi
Despite an increase in my personal tax allowance like everyone else for the first 2 months of this financial year I am paying £85 a month more in tax.


In March last year I paid £376.07 in tax on a basic month. My tax code was 1164L


In April, I paid £461.40. this again was a basic month with exactly the same basic salary. My tax code is now 1199L


This is obviously a bit confusing!


My National insurable pay for 2017/2018 was £52,508.77 and taxable £47,927.79


Any idea's?


thanks


Tim

To have paid £461.40 tax with a code of 1199L would suggest that your taxable pay was about £3300.00.
On this level of earnings you would be paying tax at 20% on earnings over your tax free allowance.

Last year you had a taxable pay of £47,927.79. This would result in you paying some tax at 40% tax rate.
A yearly figure of £47,927.79 gives an average monthly pay of almost £4000.00.
As your last monthly pay for 17/18 was the same as the first monthly pay for 18/19 your earnings for that month were lower than your average earnings for that year.
PAYE is a self correcting system so that you pay the tax due as at your earnings point in the year but if your earnings change your tax adjusts. This means that if in your case your earnings earlier in the year have had 40% tax deducted as if you were going to continue earning at that level. As your earnings reduced at some point as the tax year progressed the PAYE calculation meant that you had over-paid tax at 40%. This over-paid tax was then converted to tax at 20% and reduced the amount of tax you would pay for those months.

The two months you are comparing ie last month old tax year and first month new tax year are not really comparable in these circumstances, This tax year you are only in the 20% tax band while last year your tax was being corrected by paying you back some tax you had in affect over-paid earlier in the year.

Forget the run of the mill tax calculators they cannot handle situations like this.

If you are still not sure (I know it is not an easy idea to grasp if you are not used to PAYE) you might like to list your monthly salaries for last year and tax paid for a step by step explanation. Just need taxable pay and tax paid with tax code for each month.

BoGoF

Would really need all the payslip information to give an answer.

Also, are you resident in Scotland?

omgimcrap

Hi and thank you for your reply chrisbur.


That actually makes a good deal of sense.


Thank you for taking the time to make such a comprehensive reply.


Regards


Tim