Wrong tax code?

BoiledBreadTomatoSauce

Hi all

Apologies if this belngs in the "cutting tax" forum, let me knwo if it needs moved...

Go my payslip in and I noticed I'm on tax code S1250L M1. I know S1250L is the standard code in Scotland but not sure what M1 signifies, can anyone clarify?

My take-home pay is currently about £25 a month below what online salary calculators predict (which have been accurate to within a few pennies in previous roles). Is the M1 some sort of emergency tax code and what can I do to rectify?

Thanks in advance.

JCS1

BoiledBreadTomatoSauce wrote: »

Hi all

Apologies if this belngs in the "cutting tax" forum, let me knwo if it needs moved...

Go my payslip in and I noticed I'm on tax code S1250L M1. I know S1250L is the standard code in Scotland but not sure what M1 signifies, can anyone clarify?

My take-home pay is currently about £25 a month below what online salary calculators predict (which have been accurate to within a few pennies in previous roles). Is the M1 some sort of emergency tax code and what can I do to rectify?

Thanks in advance.

M1 signifies Month 1 basis, so any earnings/tax in prior months are not included when calculating tax. Have you recently changed jobs and completed a new starter form?

BoiledBreadTomatoSauce

Yes I started a new job at thew beginning of May. The recent payslip was my second month's pay, though still on the M1 code. I completed a new starter form in my first few days here.

Worth noting that I got taxed slightly more this month too, even though the code was the same as on my May payslip.

JCS1

Was the pay different in May to June? You may not have worked a complete month in May?


You will need to phone HMRC, it's is only them who can review/change your tax code.

BoiledBreadTomatoSauce

The plot thickens - I logged into HMRC and not only is the tax code they have for me different than the one on my payslip, but their estimated income for me is around £8k above my salary.

I worked a compete month in May and my gross pay was identical to the penny.

BoGoF

What were you doing prior to this new job? If you had a job that finished have you received a P45 from your old employer?

What code is showing in your personal tax account?

BoiledBreadTomatoSauce

I was in a previous role and completed a starter checklist. I received a P45 but was told it wasn't needed by the new job as the checklist would cover it.

I still had quite a bit of holiday allowance left in my old job meaning my final payslip from them was higher than usual, plus the contracts overlapped by 2 days. I'm guessing this may have something to do with the confusion.

The code in my personal account is S1182LX, the code on my payslip is S1250L M1.

Dazed_and_confused

The code in my personal account is S1182LX, the code on my payslip is S1250L M1.

Without details of how it has been arrived at S1182LX on its own doesn't really tell us much.

But it may be that your tax code allowances have been reduced so that you pay off tax owed for the current tax year (2019:20).

It isn't unusual to owe some tax when you change jobs. It often happens if you are paid twice in the same tax period, once by your old employer (who uses your existing tax code) and once by your new employer (who uses the emergency tax code which allows some more of that pay periods allowances). The end result is you have received the benefit of too much tax free pay in one tax period so owe a bit of tax.

The breakdown of your new tax code would help.

chrisbur

If you want an explanation you need to give full figures
From P45
Gross
Tax
Tax code
Week or month number

From your two payslips
Total gross
Taxable gross (if this shows as a different figure)
Tax code
Month number
National insurance
Pension deduction
Any other deductions
Taxable pay to date
Tax paid to date

BoiledBreadTomatoSauce

I'll post when I can get home and check the P45, however there is still another major problem.

My HMRC account also estimates my current salary as around £8k more than it actually is and so has suggested I'm underpaying again this year. My account on HMRC shows 2 monthly payments so far of £3166 gross, yet estimates my annual salary at over £45k. I have informed them this is my only job so how can they possibly claim I am earning that much?

Why could this be happening? I have edited the details to my correct salary but have no control over however much they decide they want to tax me on.

Dazed_and_confused

On that level of salary it's probably not going to make much difference although with you being Scottish resident for tax purposes updating it to whatever you think is going to be the most accurate figure would be sensible as it is over the Scottish higher rate threshold.

You need to remember that figure is just an estimate, HMRC cannot possibly know for definite what you will earn from an employment which still has 9 months of payments still to come.

but have no control over however much they decide they want to tax me on.

It isn't the amount you will be taxed on though. You will be taxed on what your employer pays you. The figure HMRC use is to try and get your tax code as accurate as possible. It w quite possible for their figures to be hugely different to what you end up being paid and it would make no difference whatsoever to the tax you pay.