Overpaid Tax from my employer

Brookelucy

Hello, 

I recently started a new job after the new tax year April 5th 2022. At the end of April I received payment from my old employer which was only 2 weeks of work (1900 before tax). 

I then had my first pay cheque with my new employer (10,638 before tax) as I got a sign on bonus too. 

My tax code was 1234L. 

My understanding here is I am allowed to earn up to 12,340 in personal tax free allowance and anything over that is taxed at the usual rate. 

However, I was taxed a substantial amount, even though in the two pay periods from April 2022 It was only roughly £500 over my personal tax allowance. 

Can someone please explain if I am seeing this correctly, and that HMRC should have only taxed the £500 over my allowance and then placed me on the usual tax for the rest of my yearly salary, onwards from my next pay cheque which will be in June etc. 

I've tried to discuss with HMRC and they aren't very helpful. My employer PayRoll told me to get a cumulative tax code, so now I have 1234LX - but when I calculate this for my June pay cheque, I'm still being taxed as I would throughout the year, they explained I could be invisibly refunded the tax through other pay cheques, but this doesn't appear to be the case. 

Do I have the right to ask for a refund now? HMRC are telling me I have to wait until the end of the year where the system calculates automatically, but with rising energy prices and cost of living, I could really do with the ££ I've overpaid tax on back in my account!

Thank you x 

Dazed_and_C0nfused

You have a basic misunderstanding of how PAYE works.

Your tax code allowances, when in a cumulative tax code, are spread out evenly across the tax year.

So after two months of 1234L the first £2,058 would have no tax deducted and the remainder would have some 20% and some 40% tax deducted.

40% tax is payable because after two months you are currently earning c£75k/year.

You would likely have got some of that 40% tax back by paying less at the end of June but a non cumulative tax code prevents that (1234L is cumulative, 1234LX is non cumulative).

You probably have overpaid tax.  But not for the reason you think.

If you post the exact details from each payslip received in the current tax year then it should be possible to get an idea of how much, if anything, you have overpaid.

You also need to confirm what your taxable pay on your next payslip will be and when it will be paid.

sheramber

You donlt get the tax free amount all at once. You get 1/12 of it each month.

[Deleted User]

Sometimes it is easier to look at in terms of tax payments as opposed to allowances. If your annual salary, for example, was exactly 6000 above your personal allowance you would pay £1200 in tax throughout the tax year. (20% of £6000). The PAYE system ensures that you pay £100 per month every month (give or take the odd 20p).