£9 difference in tax allowance

JohnB1182

For year end 2019 my tax code was 1185L
The Pay and Income Tax details taken from my P60 show that £11859 has been used as the tax free allowance. As a lot of online calculators do, as does the one provided on this MSE site.

I am now filing a Self-Assessment tax return to take advantage of the tax relief on an EIS investment for which I have now received the EIS3 certificate.
My assessment was very straightforward, I earned below the Personal Savings Allowance threshold of savings interest and everything else was written on my P60 or the EIS certificate.

At the end of my online assessment my Full Calculation, looks to have used £11850 as the tax free allowance, resulting in the identification of 20% tax of an additional £9 above what I have actually paid.

I didn’t really invest very much in the EIS so although ~£1.80 is not a lot, it has eroded the incentive by a reasonable percentage.

Should I just get over it? As the reality is on the form HMRC rounded up the actual tax deducted up by £0.20 to the next whole pound and rounded the Pay down by £0.74 to the next whole pound, meaning I actually have £0.94 more in my pocket than HMRC think. So in reality I am only arguing over £0.86. Still, it’s the principle that counts, I had expected to receive the full income tax relief against what I have actually already paid. Actually, better still, I would rather it was £0.86 in my favour!

I suppose my question is… Am I about to pay £1.80 more than I should, or have I previously been taxed at source £1.80 less than I should?

Dazed_and_confused

I suppose my question is… Am I about to pay £1.80 more than I should, or have I previously been taxed at source £1.80 less than I should?

No and no.

Your employer used the correct tax free allowances applicable to tax code 1185L.

The Self Assessment calculation allows the correct Personal Allowance for 2018:19 (assuming adjusted net income is £100k or less and you haven't applied for Marriage Allowance).

This is how PAYE and Self Assessment have worked for as long as they have existed.

uknick

Everyday is a school day. I never knew about the 9 being added for PAYE purposes.

Is this done for every year, e.g. 2019 will be £12,509?

BoGoF

For the purposes of tax tables it has always been taken as +9. Your tax code basically drops the last digit and replaces it with L (for the majority). Therefore somebody with allowances/reliefs of £12,501 would have the same code as somebody with allowances/reliefs of £12,509. I assume to reduce the burden the tax tables were 'rounded up to +9. Remember that back in the day tax tables would have been a manual process.

molerat

It will actually be £12509.16. It is not as generous as it seems though. If your tax free allowance is £12509 your code is still 1250 which gives you the same £12509.16.

chrisbur

molerat wrote: »

It will actually be £12509.16. It is not as generous as it seems though. If your tax free allowance is £12509 your code is still 1250 which gives you the same £12509.16.

Just to be really pedantic it is only £12509.16 for monthly paid employees, anyone paid weekly (or every two or four weeks ) gets £12509.64. The figures used for each band also have to divide equally by 52 for weekly and 12 for monthly.
As a final complication for PAYE after the tax allowance has been deducted tax is only payable on the pounds any pence are ignored.

[Deleted User]

For the oldies amongst us, the personal allowance always ended in a ‘5’ right up to 2012/13.

Presumably to mitigate the huge discrepancy in tax?

jimmo

[Deleted User] wrote:

For the oldies amongst us, the personal allowance always ended in a ‘5’ right up to 2012/13.

Presumably to mitigate the huge discrepancy in tax?

If you were really old…. When I joined the Inland Revenue the single person's allowance (AS) was £220 and the code number was 200. The married man's allowance (AM) was £340. That code was 500.
Never managed to work out the logic behind that.

[Deleted User]

jimmo wrote: »

If you were really old…. When I joined the Inland Revenue the single person's allowance (AS) was £220 and the code number was 200. The married man's allowance (AM) was £340. That code was 500.
Never managed to work out the logic behind that.

Those acronyms! NDA, GCD, LPA, APA, AA, NNL, OCD They were everywhere? Yes, I did make the last one up!

I have no recollection of that coding that you refer to - before my time?

badger09

[Deleted User] wrote:

Those acronyms! NDA, GCD, LPA, APA, AA, NNL, OCD They were everywhere? Yes, I did make the last one up!

I have no recollection of that coding that you refer to - before my time?

EIR, MAA, FAM & FAD, ANZT Review anyone?:o

badger09

badger09 wrote: »

EIR, MAA, FAM & FAD, ANZT Review anyone?:o

NWP & TPA

Two of my favourites:rotfl: