Adjustment to Rate Band help please

[Deleted User]

Dazed_and_C0nfused said:

The figures that I have for the 2019/20 tax year are:
Main Job earnings £48,179.42 (Tax code £1286L)
Overtime earnings £7,497.05 (Tax code BR)
Total £55,676.47

Are these figures your taxable earnings i.e. the figures which will go on your P60's?

Yes Dazed - This would be borne out by the previous comment regarding contribution rates - this increases from 9% to 12,5% when WTE is over £47845. Incredibly, if one earns 47845 one pays £4306. Earn £1 extra and pay £5980. 

Dazed_and_C0nfused

purdyoaten2 said:

Dazed_and_C0nfused said:

The figures that I have for the 2019/20 tax year are:
Main Job earnings £48,179.42 (Tax code £1286L)
Overtime earnings £7,497.05 (Tax code BR)
Total £55,676.47

Are these figures your taxable earnings i.e. the figures which will go on your P60's?

Yes Dazed - This would be borne out by the previous comment regarding contribution rates - this increases from 9% to 12,5% when WTE is over £47845. Incredibly, if one earns 47845 one pays £4306. Earn £1 extra and pay £5980. 

Our posts crossed.

As far as I can see in this case the op will owe c£1,100.

Homebuyer78

Dazed_and_C0nfused said:

purdyoaten2 said:

Dazed_and_C0nfused said:

The figures that I have for the 2019/20 tax year are:
Main Job earnings £48,179.42 (Tax code £1286L)
Overtime earnings £7,497.05 (Tax code BR)
Total £55,676.47

Are these figures your taxable earnings i.e. the figures which will go on your P60's?

Yes Dazed - This would be borne out by the previous comment regarding contribution rates - this increases from 9% to 12,5% when WTE is over £47845. Incredibly, if one earns 47845 one pays £4306. Earn £1 extra and pay £5980. 

Our posts crossed.

As far as I can see in this case the op will owe c£1,100.

Oh dear, I had best pay back that takeaway then! To get it straight, my pension is not counted toward my final years salary in terms of what I owe HMRC? I interpreted that I do not pay any tax on my pension contributions, therefore the overtime and the pension seemed to largely cancel each other out? This led us to the figure of a couple of hundred pounds that I owe HMRC?

I've just tried to access my P60 but the system is down till tomorrow. I will post it up then if you wouldn't mind giving comment? When I say the full amount is reported to HMRC, I mean that I don't touch anything, it just all goes to them. From what I understood earlier, I should have any pension contributions taken off, and then be taxed on what is left? I know I have a separate bit that states pay before tax, and then taxable pay. I'll have to have a look tomorrow - can't access any of it at present.   

Dazed_and_C0nfused

Based on what you have said in this thread your earnings for 2019:20 from your main job would have been about £55k but only £48k is taxable.

Your pension contributions can be ignored from that point on, it is these contributions which mean your taxable income from that job is only £48k, not £55k.

£48k is under the standard higher rate threshold (assuming you are not Scottish resident for tax purposes in 2019:20) leaving just under £2k of your second job which can be taxed at basic rate.  The remaining £5.5k will be taxable at 40% but only 20% tax has been deducted meaning another £1,100 tax will be due.

However, if your original figures were wrong this will change all of the above.

[Deleted User]

Dazed_and_C0nfused said:

Based on what you have said in this thread your earnings for 2019:20 from your main job would have been about £55k but only £48k is taxable.

Your pension contributions can be ignored from that point on, it is these contributions which mean your taxable income from that job is only £48k, not £55k.

£48k is under the standard higher rate threshold (assuming you are not Scottish resident for tax purposes in 2019:20) leaving just under £2k of your second job which can be taxed at basic rate.  The remaining £5.5k will be taxable at 40% but only 20% tax has been deducted meaning another £1,100 tax will be due.

However, if your original figures were wrong this will change all of the above.

Agreed. For final clarification - is the salary quoted before or after pension contributions? The op stated basic salary throughout.

Homebuyer78

purdyoaten2 said:

Dazed_and_C0nfused said:

Based on what you have said in this thread your earnings for 2019:20 from your main job would have been about £55k but only £48k is taxable.

Your pension contributions can be ignored from that point on, it is these contributions which mean your taxable income from that job is only £48k, not £55k.

£48k is under the standard higher rate threshold (assuming you are not Scottish resident for tax purposes in 2019:20) leaving just under £2k of your second job which can be taxed at basic rate.  The remaining £5.5k will be taxable at 40% but only 20% tax has been deducted meaning another £1,100 tax will be due.

However, if your original figures were wrong this will change all of the above.

Agreed. For final clarification - is the salary quoted before or after pension contributions? The op stated basic salary throughout.

Morning all. So, I have got onto my online payslips, and my March payslip shows total pay of £4,281.92, and taxable pay of £3,883.70. My pension contribution that month £398.22 which is the difference between the two numbers. 

Taxable pay for the year to March 2020 was £48,179.42, with tax paid of £7062. It has a box where it says Gross pay of £52,908.68, and pensionable pay of £4281.92. Not sure if that helps with the above queries?

Dazed_and_C0nfused

So if your original figure for the other job is also correct then it will be c£1,100 you will owe for 2019:20.

You can use your Personal Tax Account to update HMRC with details of your expected taxable pay for each job and if necessary they will revise your tax code for the current tax year.

You don't need to tell HMRC anything whatsoever about the pension contributions as you have received the maximum possible tax relief by these reducing your taxable income on your payslip/P60.

If you continue in employment the tax owed for 2019:29 would usually be collected by reducing your 2021:22 tax code.

Homebuyer78

Reading through it, I am assuming that my P60 would show earnings of £48k and some change for the last tax year, so what you were saying about NHS being tax beneficial as they take your pension contributions out automatically? So when my £7k of overtime is added on, it means I am about £5k into the higher tax bracket, and therefore I will owe the taxman £1100? 

Dazed_and_C0nfused

Basically yes.

You have saved paying 40% tax on all of the £4k+ you made in pension contributions 

There may be some other minor adjustments depending on why your tax code was slightly different to the big standard 1250L but £1,100 should be in teh correct ball park assuming there isn't any other income you haven't previously mentioned.

Homebuyer78

Dazed_and_C0nfused said:

Basically yes.

You have saved paying 40% tax on all of the £4k+ you made in pension contributions 

There may be some other minor adjustments depending on why your tax code was slightly different to the big standard 1250L but £1,100 should be in teh correct ball park assuming there isn't any other income you haven't previously mentioned.

Ok, thanks for clearing that up. It was what my gut instinct was last year when I started putting money aside to cover the bill, so I will sit and wait for the demand letter to land on my doortstep in the next few months. Not to worry - I owe what I owe so fair cop and all that.