Sudden change Cumulative to non-cumulative...why? £400 extra tax

Hazzoura22

Hi,

My husband has just received his December payslip and been taxed over £400 extra on PAYE.

His tax code has gone from 1234L cumul to 117L noncumul.

He filled in a self assessment tax return at end of November and we were expecting to have an extra £800 collected through PAYE due to the Child Benefit Charge as he was over the threshold, but I don’t understand why it’s gone to 117L (implying we owe 1,170?) and also why it’s changed to non cumulative?

I presumed the £800 would be spread over the year so we wouldn’t get a huge wage reduction all at once. It’s come as a big shock especially as Christmas is expensive as it is!

My husband is obviously going to phone HMRC but I just wanted some insight if possible...they’ve fobbed us off in the past!

(Earlier in the year we had to pay £900 in one go that they had failed to take through PAYE, apparently the employers fault that they hadn’t changed the tax code and we hadn’t noticed to query it, and because he had to move to self assessment because of Child Benefit they said we had to pay in one go as it was too late to put that year through PAYE...so it’s not like he’s got tax lingering from previous years!)

Pennywise

He will have received a PAYE coding notice through the post explaining the new tax code. If not, he can view it via his online personal tax account.

Linton

I think the answer is something like....
The tax code change means that the tax allowance has dropped by the equivalent of about £11000 annually. If the tax code was cumulative that would mean extra tax this tax year of £11000 x 20%=£2200 assuming basic rate tax. But as it is non cumulative it only applies for the remaining months of this tax year which amounts to 1/3 of a year ncluding this month. So the extra tax paid by the end of the tax year would be about £700. Or more if partially at higher rate tax.

Hazzoura22

Pennywise wrote: »

He will have received a PAYE coding notice through the post explaining the new tax code. If not, he can view it via his online personal tax account.

Thanks for your help. We’ve not received anything by post. I’ll ask him to check online.

Hazzoura22

Linton wrote: »

I think the answer is something like....
The tax code change means that the tax allowance has dropped by the equivalent of about £11000 annually. If the tax code was cumulative that would mean extra tax this tax year of £11000 x 20%=£2200 assuming basic rate tax. But as it is non cumulative it only applies for the remaining months of this tax year which amounts to 1/3 of a year ncluding this month. So the extra tax paid by the end of the tax year would be about £700. Or more if partially at higher rate tax.

Thank you for your help...he is on partially 40% tax, so it might work out about right for paying back the £800 we owe? Or will it still work out too much?

If they continue to take £400 extra each month then we will end up paying £1600 from now till April?

I also didn’t realise they would take it all in this tax year. I thought it would be spread out on the next one. It would have been even worse if we left it til 31st December deadline.

agrinnall

Hazzoura22 wrote: »

Thanks for your help. We’ve not received anything by post. I’ll ask him to check online.

Coding notices seem to be taking a while to arrive. I've just had my first pension payment and it had the wrong tax code, but when I checked online the right one had been allocated and my regular job's tax code amended to take into account the underpayment (and that tax code was on the payslip that was issued yesterday) but so far there's been no sign of a P2.

Hazzoura22

Thanks all...been reading on Gov.uk website....

“How deductions are made
The tax you owe will be taken from your salary or pension in equal instalments over 12 months, along with your usual tax deductions.’

So I didn’t just presume that, I must have read it from them.

So it must be a mistake that they’re taking it all quickly and not over 12 instalments?

Linton

Is the £400 extra tax right if you include both the repayment for previous months and the child benefit change going forward?

It is impossible to say precisely what is going on without knowing all the figures so you will have to discuss it with HMRC.

Hazzoura22

Linton wrote: »

Is the £400 extra tax right if you include both the repayment for previous months and the child benefit change going forward?

It is impossible to say precisely what is going on without knowing all the figures so you will have to discuss it with HMRC.

I don’t think so. We don’t owe anything other than the £800 now as far we know. We paid the £900 in one go around May/June from our overdraft. So as far as I know we only owe £800 which gov.uk say should be taken in 12 equal instalments and another website I found called taxaid says it usually comes into effect the following April. That’s why I’m so confused!

If course I appreciate you can’t really advise further...I’ll just have to be patient and wait for my husband to get onto HMRC.

Thanks again

sheramber

The underpayment from your self assessment is for 2017/18 and that would normally be collected through the code for 2019/20.

Any underpayment coded in the current year would normally be a potential underpayment for the current year which is now collected over the remaining months of the current year

What year was the £900 underpayment for?

Hazzoura22

sheramber wrote: »

The underpayment from your self assessment is for 2017/18 and that would normally be collected through the code for 2019/20.

Any underpayment coded in the current year would normally be a potential underpayment for the current year which is now collected over the remaining months of the current year

What year was the £900 underpayment for?

The 900 was for 16/17. They informed us of the change in tax code in Apr 17 to collect it, but for some reason it didn’t get collected so when he went through Self Assessment for the Child Benefit (mid year because we missed the boat with needing to do it) around June this year it came up as owing, so we paid it in one lump sum.

Thanks for your help!