Wrong tax code because of bonus?

Nasqueron

Try and keep this short and factual

• I left my old job 7/4/17 (per P45) with earnings that tax year of £980.76 from the old job due to working 2 days of the tax year + a bonus, holiday pay accrued etc - based on tax code 1128L (salary £20,000).
• I started at current job April 10th 2017 (salary £23000.04) so there was a bit of crossover and my P60 shows final tax code of 1128LM1 for tax year ending 5th April 2018 - total income £22548.99 with £2246.40 tax deducted and £1748.16 NI
• This tax year just gone my payslips said tax code 1163L. As of 1/9/19 the firm I work for was bought out and we were tupe'd over. We were enrolled on a company medical insurance scheme which I opted out of as soon as I found out (this was in January) as there is a BIK tax issue and I have cover through my partner anyway
• I received a 3.01% salary increase (to £23693.16) effective this tax year but we also received a bonus of £690 and my payslip is now showing tax code 1228L

Pay rise = £57.76 a month more + bonus £690 but my actual pay in the bank is £441.43 higher.

I have paid £134 more in tax, £87.69 more in NI and £62 more in student loan (plan 1) repayment I guess because of the bonus, plus £22.64 extra into my pension (done 1% AVC on top of basic 5%)

I don't understand why I am on 1228L not 1250L nor why I was on 1163L last tax year, should it have been 1185L?

I also need to know whether the tax situation is right - are they just taxing me more because of this one off or will it affect the rest of the year and end up being wrong?


Edit - I found out the tax code is 1153L in part due to a £151 underpayment last year though they reduced my personal allowance by £758 for some reason to cover this?

Dazed_and_confused

I don't understand why I am on 1228L not 1250L nor why I was on 1163L last tax year, should it have been 1185L?

Given it each code is 22 points less than the emergency tax code (1185L/1250L) it is likely to be the same reason in each year.

The simplest way to find out why the code is 1228L would be to look at your Personal Tax Account on gov.uk. This should show how the code has been calculated. You may also be able to see the same information for last years code.

Dazed_and_confused

It also looks like you might owe c£200 from 2017:18 however that depends on how the 1128L tax code was calculated and if anything has relevant has changed for 2017:18.

Dazed_and_confused

I also need to know whether the tax situation is right - are they just taxing me more because of this one off or will it affect the rest of the year and end up being wrong?

If the 1228Ltax code is correct then nothing will change as far as the tax is concerned. Although obviously the monthly amount will naturally reduce if you don't get the bonus again.

sheramber

In 2017/18 you were paid by your old job on 7 April so would be taxed on month 1 of new tax year.

But if your new job payed you at the end of April and if they also used the month 1 tax tables then you would receive your personal allowance for month 1 twice.

AS a result you would have underpaid tax at the end of the year.

You pay tax at 20% so the underpayment of £151 is being collected by the adjustment of 758 ( 758 @20% = 151.60)

chrisbur

Nasqueron wrote: »

Pay rise = £57.76 a month more + bonus £690 but my actual pay in the bank is £441.43 higher.

I have paid £134 more in tax, £87.69 more in NI and £62 more in student loan (plan 1) repayment I guess because of the bonus, plus £22.64 extra into my pension (done 1% AVC on top of basic 5%)

These figures certainly look close to what I would expect to see but to check them accurately would need to know from payslip
Total gross
Taxable gross
Tax paid
NI paid
S Loan paid (and percentage for your loan)
I assume it is month 1

Nasqueron

Thanks all, I believe the small tax underpayment was because of my old job (in 2017) only paying £8 on £980.76 of earnings which was in the 2017/18 tax year because of my leaving date. The numbers and earnings on HMRC are correct that I can see so I believe they are doing it all right and just got stung a lot in this first month due to the bonus. I did find out though from digging around in the HMRC site they still have me as having £211 of BIK (which I believe is the health insurance) for this year even though it was cancelled already so I need to ensure my P11D correctly shows this and I will then go on the site and declare this is no longer being paid and maybe that will return a bit of tax

chrisbur wrote: »

These figures certainly look close to what I would expect to see but to check them accurately would need to know from payslip
Total gross
Taxable gross
Tax paid
NI paid
S Loan paid (and percentage for your loan)
I assume it is month 1

Total Gross 1974.43 + 690 = £2664.43
Taxable pay £2545.96
Tax paid £304.20
Student loan £97
Employee's NI £233.45
Total deductions £753.12 (with £118.47 pension - 6%)



The SL is on 1.5% at the moment, it's from 1999 and I am now earning enough to slowly pay it down

chrisbur

Nasqueron wrote: »

Total Gross 1974.43 + 690 = £2664.43
Taxable pay £2545.96
Tax paid £304.20
Student loan £97
Employee's NI £233.45
Total deductions £753.12 (with £118.47 pension - 6%)



The SL is on 1.5% at the moment, it's from 1999 and I am now earning enough to slowly pay it down

Taxable gross 2545.96 less tax allowance for month 1 on 1228L of 1024.09 gives tax due on 1521.87 Tax is always done on full pounds only so 1521 at 20% is 304.20

NI is due on full gross so 2664.43 less monthly allowance of 719 so NI due on 1945.43 at 12% is 233.45

So tax and NI are spot on

Student loan not something that I have kept up to date on but as far as I can see the allowance is 18935 per year so 1577.92 per month so 2664.43 less 1577.92 is 1086.51 at 9% is 97.79
As far as I can tell this gets rounded down so £97 looks right to me. I assume the 1.5% you referred to is the interest rate not the repayment rate.

So certainly tax and NI spot on and probably student loan also.

What makes it look like you have paid a lot is that all the deductions have an allowance before you pay but then in your case anything above these allowances is deducted at the going rate so 20% tax 12% NI 9% s/loan.

When I say the figures are correct that assumes the tax code is correct, if this code changes then the tax you paid this month would be adjusted.