Trivial difference in tax calculation

Bemma

I'm hoping this is a trivial question, possibly a rounding error or something, but I can't reconcile the tax on my payslip!  It's only out by 34p, but something is niggling at me that I'm doing something wrong, which could result in a more serious mis calculation in the future or I'm misunderstanding something on how tax is calculated.

From my payslip:
Tax Code 1257L
Taxable Pay £2555.19 (April, Month 1)
Tax £301.20

The calc I'm do is:  2555.19 / (12570 / 12) * 20% = £301.54

So what am I missing?  I have a vague recollection of discrete lookup tables were used years ago, which built in some kind of rounding, but surely that's not used anymore?

Thanks.

[Deleted User]

Hi,

try this wee gadget, for a few pennies, wouldn't worry about it, though if you're losing sleep over it contact HMRC.

chrisbur

The tables you refer to were table A and then B to D They are still in use all computer programs for PAYE just have these tables built into them.  The table A figure is the amount you pay no tax on and you have assumed 12570 but for monthly paid on 1257L code the figure is actually 12579.12 this covers all allowances from 12570 to 12579 so no-one overpays tax.  There is then a bit more juggling so that the monthly figure is exactly 1/12 so 1048.26
That would give 2555.19 less 1048.26 is 1506.94 20% of that is 301.39 
Getting closer but there is more.
Cumulative tax is worked out each month on your taxable pay to date but having worked this figure out tax is only deducted on full pounds so you should notice that while you are on English tax your tax figure will often vary by 20p
The above being month 1 tax would only be due on £1506 which is £301.20
That .94p will be carried forward to next month and if you earn the same that will put an extra pound into the round pounds so your tax will be £301.40
This variation between .20 and .40 will continue to the tax year end with anything left in the pence that month being ignored so you just might get away with another .99p not being taxed.
If HMRC ever had to due a tax calculation themselves they would do it a bit more accurately (eg self assessment )  but if PAYE is all you have that ends the matter.

Bemma

Thanks for the excellent answer @chrisbur .  The tables sound like legacy functionality that can't be changed overnight!  Expensive to reprogramme all the PAYE software.  The 'extra' 9.12 makes sense and I didn't know about that.  Also, thanks for the comprehensive answer to the full pounds.  I had expected that the cumulative nature of this will probably average itself out over the whole tax year - now with the opportunity to benefit from an extra 99p tax free!

I'll have to update my spreadsheet to try and match this rounding.  Not that a few pence really matters, but I was worried I was making a more serious calculation error and I'm a bit OCD on this kind of thing.