Am I paying too much income tax?

DrHyde

Hi there,
Hope you're all save and sane - crazy times!
I'm wondering if I am - since 2 successive pay rises w/i 2 months (I know  ) - I'm now paying too much income tax.
Note, I live in Scotland.



In my understanding, I pay the same rate of income tax in Scotland when I earn between £25,297 to £43,662 within that tax year.
My gross pay since January nudges me over that threshold over the course of a year. But within this financial year, may taxable pay is still beyond £43k.
HMRC appears to be treating my income as though I had earned that monthly income throughout the year - see the tax % I pay (highlighted red) in Jan and Feb since the pay rise.
They have the new tax code - is that the issue? Should it not have updated now?
Will I be needing to claim money back?
Thank you for your help and have a great weekend,
Dr H

[Deleted User]

‘the new tax code’ - Can you elaborate?

DrHyde

Sure - actually looking into this just now:
I had tax code S1219L in April - August
then S1169L from August... So the tax code hasn't changed actually since the pay rise.

chrisbur

That lower tax code was not applied in August.  

Are you rounding these figures a bit?

chrisbur

Lower code appears to have been applied in May on a non-cumulative Month 1 basis.
This has resulted in your pay for Jan and Feb being treated in isolation as if you earn it all year.  No allowance has been made for unused lower tax band in earlier part of the year.
Why was your code changed could be you would be as well to ask HMRC to use a cumulative tax code.

DrHyde

chrisbur said:

That lower tax code was not applied in August.  

Are you rounding these figures a bit?

Yes, there may also be a small effect of private health insurance.

DrHyde

chrisbur said:

Lower code appears to have been applied in May on a non-cumulative Month 1 basis.
This has resulted in your pay for Jan and Feb being treated in isolation as if you earn it all year.  No allowance has been made for unused lower tax band in earlier part of the year.
Why was your code changed could be you would be as well to ask HMRC to use a cumulative tax code.

OK that non-cumulative Month 1 makes sense.
No idea why it's been change.

So is your recommendation then to clarify with HMRC? Would you agree there's something odd going on?

chrisbur

For some reason HMRC needed to change your tax code to a lower figure, they worked out a code that would take the tax required for this year when applied on a non-cumulative basis assuming there was no great change in your salary.  Your salary did change though so assuming your correct code is something around S1169L ( might be a bit different as this was based on using it for 11 months) you are paying extra tax. Cannot be 100% certain as no details known of why code changed.
Speak to HMRC explaining extra pay pushing you into higher band on non-cumulative code and hopefully they can issue a cumulative code in time for next payday otherwise you will have to wait until your tax is checked after the tax year end. 

DrHyde

Amazing thank you!

littledog70

DrHyde said:

chrisbur said:

That lower tax code was not applied in August.  

Are you rounding these figures a bit?

Yes, there may also be a small effect of private health insurance.

could that also a factor in you paying to much tax. Was the med insurance in the tax code all year, or did hmrc find out about it from a p11d late on in the year and then alter the tax code with a in year deduction to grab back the unpaid tax?