Income Tax YTD / Tax Bands

sgx.saint

Hello.

Can someone please sense check the understanding of my current income tax situation.

I live in Scotland, so subject to the five levels of income tax rate.

I started a new job two months ago, with a significant increase in salary.

I was earning around £30K per year and I now earn a yearly salary of £55K.

As income tax is cumulative and worked out over twelve months, I believe I am correct in saying that I'll be taxed less before the next financial year as my overall earnings for this year will be less than or only just slightly over the 21% rate/cap of £43,430.

My P45 from October, when I also started my new job, shows YTD of £15941 and I expect I'll earn around £28K before the end of the financial year, so a total of around £44K.

However, come April, I'll be taxed more, as I'll be forecast to earn the full £55K gross yearly salary and as a result have a greater proportion of my earnings taxed at the 41% rate.

Have I understood things correctly?

Thanks

BoGoF

I think so....if I'm understanding what you mean.

If you are saying that in from 6/4/19, your take home pay will be less you would be correct.

sgx.saint

Hello, yes, essentially that's what I'm saying.

I used a tax calculator, fired in pension, student loan and I reckon I'll be £300 better off per month until April.

sgx.saint

Is there a tax calculator online that would allow me to enter my YTD earnings plus new salary and deductions to see what my monthly net will be until the end of the financial year?

Dazed_and_confused

Google manual PAYE calculation and try the first link on the gov.uk page which comes up first on Google (for tax calculation).

National Insurance isnt cumulative and the second link on the same page works just fine for that.

sgx.saint

Thanks

Had a quick look, not sure I understand how to complete it in full.

Dazed_and_confused

There are only 8 fields to complete.

Three of them can be taken from your P45 or final payslip from your old employer.

Another three will be based on how your new employer pays you. Which you must know to think you could work this out with any calculator in the first place.

One will depend on whether you have handed in your P45 to your new employer or completed a new starter declaration.

One is presumably nil (unless you are on incredibly low income or have a horrendously bad K code).

Which bits are you unsure about??

sgx.saint

Okay, so this is page one from the calculation.

https://imgur.com/Q6I9ikA

I added the total gross pay to date from my P45 to the total gross pay to date from my most recent payslip.

I did the same for tax, from the P45 and most recent payslip (though the year to date on my payslip includes this months pay, which is the value I entered in the gross pay for month, so not sure if double this is double counted?

I am now on a normal tax code (S1185L) as the P45 has been processed by my payroll department and this is the second salary payment from my new employer to date.

My first salary payment was higher due to being owed for two weeks in October when I first started and I was taxed on an M1 code. I believe any back tax was offset in this months salary payment which I used for the values entered in the calculator.

This is the resulting calculation...

https://imgur.com/a/V2GLTFI

How do I know what my net monthly salary will be until April from the calculation? (I appreciate NI and other deductions will need to be factored in also)

Thanks

Dazed_and_confused

You need to make a note of the cumulative totals after your December payslip and then complete the calculation fields again using the next pay date, cumulative pay and tax and expected pay on the next pay day.

That should give you the tax due to be deducted from the next payment.

Dazed_and_confused

Are you happy that S1185L is the correct tax code?

sgx.saint

As far as I know, S1185L seems correct, I have no other circumstances that would affect my tax code to my knowledge.

I believe at some point I do need to claim back higher rate tax relief on the workplace pension but not sure that needs to be done this financial year as I won't be taxed at the higher rate until the next financial year?