Tax Payouts

Coco1234

Hi, please excuse the fact that I am relatively new to Tax and how it works.
I began work on the 17th of September. My annual income is £25,000 before tax.
My first pay slip i paid £411 in tax deductions (this was based on a 6 week pay as we worked an extra 2 weeks before being paid).

Is the correct or have i paid to much? The reason i ask is due to the fact i understand that the tax year is until April. By my calculations, if i am correct, for this tax year i am paying too much tax?
My colleague paid the same amount of tax as me, however, she come to this job from a different full paid job, where as i did not.
Can someone please elaborate on this and help me understand who i need to contact, if i do need to contact anyone and paying too much?

Thank you

BoGoF

What is the tax code on your payslip?

Sibbers123

You would've lost out by them putting 6 weeks pay through one payroll run as national insurance is calculated on a monthly period if you are paid monthly.

That is why you might be paying to much tax (well national insurance).

Coco1234

My tax code is 1185L

Thank you

sheramber

Is there an X or M1 after the code.

Coco1234

Hi, there is no letter before or after the tax code.

I have paid 411.20 in PAYE tax and 196.69 in NI

Thank you 😊

agrinnall

If you earned nothing before this job, and had no taxable benefits such as JSA, then there should have been no tax due in the October pay period even though you received 6 weeks pay. The only way in which tax would have been deducted is if you had a tax code that forced the deduction, such as BR or a NONCUMUL code, but it appears you didn't have this.



I can only think of three possible explanations, although none seem very likely:


Your pay slip hasn't printed the tax code that HMRC has actually issued
Your employer's payroll calcualtions are incorrect
Your payroll details have got mixed up with someone elses



You need to raise it with your employer, and if the are unable to offer an explanation and take corrective action, get in touch with HMRC to ask their advice.

chrisbur

Coco1234 wrote: »

Hi, there is no letter before or after the tax code.

I have paid 411.20 in PAYE tax and 196.69 in NI

Thank you ��

What was your taxable gross (also total gross if a different figure) and what was the split between the two pay periods?

Berkshire_Beancounter

What I find odd is the comment that a colleague has paid the same tax even though they transferred from another job (and presumably had a P45 form). This doesn't seem likely unless the employer's payroll department has indeed made a mistake somehow.

Coco1234, what should happen is that tax is calculated and deducted on a 'year to date' basis (although there are exceptions, which is why you were asked if you had an 'M1' code). With a code of 1185L, you get the standard personal allowance of £11,850 per annum.

If you started work in mid September and were presumably paid in October, your employer should have based your tax calculation on your cumulative pay to date, less the cumulative personal allowance to October.

I.e. if you are paid £25,000 per annum then six weeks is around £2885 gross. To calculate tax due in October, you deduct the personal allowance to date - this is seven months since the start of the tax year, so the allowance is £11850 / 12 x 7 = £6912.50. As this is more than your gross income in the year to date, you shouldn't have had any tax deducted.

In November your gross pay in the year to date would be approx £4968 (my estimate, will depend on how your employer calculates pay per month, e.g. is it simply £25k divided by 12). You get an additional month's personal allowance so your cumulative allowance is now £7,900 - again no tax to pay.

In December gross pay in the year to date will be around £7051, and cumulative allowance £8,888 - again no tax to pay.

In January gross pay will be around £9134 and cumulative allowance will be £9,875 - no tax to pay.

In February gross pay will be around £11217 and cumulative allowance will be £10,862 - so now your pay exceeds your allowance by £354 so you pay 20% tax on this - around £71.

In March gross pay will be around £13,300 and cumulative allowance will be £11,850. Your income exceeds your allowance by £1,450 so you will pay 20% tax on this, or £290 - but that's cumulative, so remembering you paid £71 in February, tax in the month of March is £219.

From April 2019 it should settle down so that each month you get 1/12 of your annual income and 1/12 of your annual personal allowance each month, so the tax paid shouldn't vary (unless you had things like overtime which affected your gross pay).

Dazed_and_confused

What I find odd is the comment that a colleague has paid the same tax even though they transferred from another job (and presumably had a P45 form). This doesn't seem likely unless the employer's payroll department has indeed made a mistake somehow.

To be honest I would say it's perfectly normal.

The colleague could be on the normal code for most people of 1185L on a cumulative basis.

The op could be on the emergency tax code which is also 1185L, but is operated on a non cumulative basis.

If the colleague had earnings from earlier in the year then chances are both of them would pay the same amount of tax.

The emergency tax code isn't always very well understood. It is exactly the same tax code as most people have but is used on a different basis so any unused allowances from earlier in the year arent taken into account.

But other than that it will result in the correct tax being deducted for a week or month looked at in isolation.

Coco1234

Thank you.

I will speak to my employer today. A fellow colleague who has no previously worked and has the same pay as me has paid no tax. So I will investigate it today.

I have previously come out of education so understand I will have my student loan to repay.

Thank you for all your help in helping me understand.