How does my new K tax code effect my pay?

Joe9

Hi all, due to an ongoing tax dispute with HMRC my tax code has changed to K353 how much extra tax will i be paying per month on my 35k salary? (I wish they taught you this stuff at school) thanks...

xylophone

https://www.taxation.co.uk/Articles/2015/11/17/333976/special-k

Dazed_and_confused

£324.

Assuming your old tax code was 1185L you are paid monthly and the £35k is after any company pension contributions

agrinnall

Put the details into a tax/pay calculator. I use this one, but there are others that do much the same thing.


https://www.thesalarycalculator.co.uk/salary.php

00ec25

Joe9 wrote: »

(I wish they taught you this stuff at school) thanks...

agreed
and as my old maths teacher drummed into us, no use using a calculator if you have no idea what it is doing and thus why the answer is correct

compare income tax on earnings of £60,000 (we will ignore NI since the tax code has no impact on that at all)

scenario a) tax code 1185L so a personal allowance of 1185 x 10 = 11,850 "negative"
taxable income 60,000 - (Minus) personal allowance 11,850 = 48,150
income tax due:
34,500 @ 20% = 6,900
48,150 - 34,500 = 13,650 @ 40% = 5,460
total tax payable 6.9+5.46 = 12,360

scenario b) tax code K353 so a personal allowance of 353 x 10 = 3,530 POSITIVE
taxable income 60,000 + (PLUS) personal allowance 3,530 = 63,530
income tax due:
34,500 @ 20% = 6,900
63,530 - 34,500 = 29,030 @ 40% = 11,612
total tax payable = 18,512

sense check:
18,513 - 12,360 = 6,152 extra tax payable all at higher rate
so 6152 / 40 x 100 = 15380 / 10 = 1538
tax code 1185 + 353 = 1538 so you are paying tax on a deemed extra 15,380 of income

obviously therefore the entire loss of the tax free 11,850 personal allowance plus the additional 3530 added to the tax code results in you paying an extra 6,152 of tax on a 60,000 income where there is a K code of K353 in use