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Am I paying too much tax?? UPDATE & QUERY

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Comments

  • Very simplistically if you are due higher rate relief on £3,220 that could well be £644.

    A tax code adjustment of £1,610 for someone paying higher rate tax under PAYE on at least £1,610 will save £644 in tax (£1,610 x 40%).

    It has nothing whatsoever to do with being for 6 months, you're just not following the maths (for those particular figures).
  • Very simplistically if you are due higher rate relief on £3,220 that could well be £644.

    A tax code adjustment of £1,610 for someone paying higher rate tax under PAYE on at least £1,610 will save £644 in tax (£1,610 x 40%).

    It has nothing whatsoever to do with being for 6 months, you're just not following the maths (for those particular figures).
    Ok. Maybe too much calculator work and over/under thinking from me there. So what am I inputting in the figures to rectify this for the year going forward? 
  • You can't do anything to change an individual pension tax relief figure in your tax code.

    You need to ensure all elements of the tax code calculation are as accurate as possible and then HMRC will calculate the appropriate tax code entry.

    The most important things are your estimated earnings from all employments/pensions you will have in the current tax year (the taxable pay figure you expect to see on your P60 in due course).

    And the gross amount of any relief at source pension contributions.

    If you have other entries such as job expenses, company car or other benefits or professional subscriptions make sure they are all upto date.
  • Bear777
    Bear777 Posts: 37 Forumite
    Second Anniversary 10 Posts Name Dropper
    Dazed and Confused - thanks again for your info previously.  I have been working this matter through with HMRC and in Dec I received a cheque for issues over the previous number of years.  I have had some resolution to the current year but I will still be owed money back from 22/23 come the end of the financial year. 

    I am in the process of potentially looking to purchase a property and was hoping that you could check my figures below based on your advice before to make sure I am calculating my take home salary correctly.  I am also looking to confirm that as a result of my pension contributions that I am below the higher rate tax threshold so that my wife can maintain child benefits.    

    As you previously identified my pension is relief at source & I am looking to confirm all of this so that HMRC have the accurate info from the start of the year 23/24 and as such that will help to ensure that my monthly tax is correct and I'll hopefully not have to go through the process that I have this year to re-coup tax paid but not due.

    Salary for tax                             - £61,672
    Taxable Benefits                        - £1,890
    Total Taxable Income                 - £63,562
    Gross Pension Contribution      - £13,500
    Income Tax Due (my workings) - £10,240 (based on below)
    NICS (my workings)                  - £4,790


    Annual Take Home Salary         - £35,842 per annum or £2,987 per month
     
    So my workings as per your previous advice is the following:

    Taxable income of £63,562
    After deducting personal allowance (£12,570) = £50,992
    Basic rate band (£37,700) + relief at source pension contributions (£13,500) = £51,200 @ 20%
    Total Tax for the year = £10,240

    I hope you don't mind taking a look at this and checking my figures are accurate. You did a great job back in Sept, so think I have finally grasped how it all works but keen to get you to double check.
  • [Deleted User]
    [Deleted User] Posts: 0 Newbie
    Eighth Anniversary 1,000 Posts Photogenic Name Dropper
    edited 14 March 2023 pm31 1:50PM
    Bear777 said:
    Dazed and Confused - thanks again for your info previously.  I have been working this matter through with HMRC and in Dec I received a cheque for issues over the previous number of years.  I have had some resolution to the current year but I will still be owed money back from 22/23 come the end of the financial year. 

    I am in the process of potentially looking to purchase a property and was hoping that you could check my figures below based on your advice before to make sure I am calculating my take home salary correctly.  I am also looking to confirm that as a result of my pension contributions that I am below the higher rate tax threshold so that my wife can maintain child benefits.    

    As you previously identified my pension is relief at source & I am looking to confirm all of this so that HMRC have the accurate info from the start of the year 23/24 and as such that will help to ensure that my monthly tax is correct and I'll hopefully not have to go through the process that I have this year to re-coup tax paid but not due.

    Salary for tax                             - £61,672
    Taxable Benefits                        - £1,890
    Total Taxable Income                 - £63,562
    Gross Pension Contribution      - £13,500
    Income Tax Due (my workings) - £10,240 (based on below)
    NICS (my workings)                  - £4,790


    Annual Take Home Salary         - £35,842 per annum or £2,987 per month
     
    So my workings as per your previous advice is the following:

    Taxable income of £63,562
    After deducting personal allowance (£12,570) = £50,992
    Basic rate band (£37,700) + relief at source pension contributions (£13,500) = £51,200 @ 20%
    Total Tax for the year = £10,240

    I hope you don't mind taking a look at this and checking my figures are accurate. You did a great job back in Sept, so think I have finally grasped how it all works but keen to get you to double check.
    It would be £50992 @20% - you haven’t earned enough to use the full £51200. Your tax is £10198.40.
  • Bear777
    Bear777 Posts: 37 Forumite
    Second Anniversary 10 Posts Name Dropper
    edited 22 January 2024 pm31 2:51PM
    Bear777 said:
    Dazed and Confused - thanks again for your info previously.  I have been working this matter through with HMRC and in Dec I received a cheque for issues over the previous number of years.  I have had some resolution to the current year but I will still be owed money back from 22/23 come the end of the financial year. 

    I am in the process of potentially looking to purchase a property and was hoping that you could check my figures below based on your advice before to make sure I am calculating my take home salary correctly.  I am also looking to confirm that as a result of my pension contributions that I am below the higher rate tax threshold so that my wife can maintain child benefits.    

    As you previously identified my pension is relief at source & I am looking to confirm all of this so that HMRC have the accurate info from the start of the year 23/24 and as such that will help to ensure that my monthly tax is correct and I'll hopefully not have to go through the process that I have this year to re-coup tax paid but not due.

    Salary for tax                             - £61,672
    Taxable Benefits                        - £1,890
    Total Taxable Income                 - £63,562
    Gross Pension Contribution      - £13,500
    Income Tax Due (my workings) - £10,240 (based on below)
    NICS (my workings)                  - £4,790


    Annual Take Home Salary         - £35,842 per annum or £2,987 per month
     
    So my workings as per your previous advice is the following:

    Taxable income of £63,562
    After deducting personal allowance (£12,570) = £50,992
    Basic rate band (£37,700) + relief at source pension contributions (£13,500) = £51,200 @ 20%
    Total Tax for the year = £10,240

    I hope you don't mind taking a look at this and checking my figures are accurate. You did a great job back in Sept, so think I have finally grasped how it all works but keen to get you to double check.
    It would be £50992 @20% - you haven’t earned enough to use the full £51200. Your tax is £10198.40.
    Lol thanks - yea I did get it to that exact figure but was rounding ;-)

    So are my figures right then based on above and it is bringing me in under the 40% tax rate??
  • Dazed_and_C0nfused
    Dazed_and_C0nfused Posts: 16,299 Forumite
    10,000 Posts Fifth Anniversary Name Dropper
    edited 22 January 2024 pm31 2:51PM
    Bear777 said:
    Bear777 said:
    Dazed and Confused - thanks again for your info previously.  I have been working this matter through with HMRC and in Dec I received a cheque for issues over the previous number of years.  I have had some resolution to the current year but I will still be owed money back from 22/23 come the end of the financial year. 

    I am in the process of potentially looking to purchase a property and was hoping that you could check my figures below based on your advice before to make sure I am calculating my take home salary correctly.  I am also looking to confirm that as a result of my pension contributions that I am below the higher rate tax threshold so that my wife can maintain child benefits.    

    As you previously identified my pension is relief at source & I am looking to confirm all of this so that HMRC have the accurate info from the start of the year 23/24 and as such that will help to ensure that my monthly tax is correct and I'll hopefully not have to go through the process that I have this year to re-coup tax paid but not due.

    Salary for tax                             - £61,672
    Taxable Benefits                        - £1,890
    Total Taxable Income                 - £63,562
    Gross Pension Contribution      - £13,500
    Income Tax Due (my workings) - £10,240 (based on below)
    NICS (my workings)                  - £4,790


    Annual Take Home Salary         - £35,842 per annum or £2,987 per month
     
    So my workings as per your previous advice is the following:

    Taxable income of £63,562
    After deducting personal allowance (£12,570) = £50,992
    Basic rate band (£37,700) + relief at source pension contributions (£13,500) = £51,200 @ 20%
    Total Tax for the year = £10,240

    I hope you don't mind taking a look at this and checking my figures are accurate. You did a great job back in Sept, so think I have finally grasped how it all works but keen to get you to double check.
    It would be £50992 @20% - you haven’t earned enough to use the full £51200. Your tax is £10198.40.
    Lol thanks - yea I did get it to that exact figure but was rounding ;-)

    So are my figures right then based on above and it is bringing me in under the 40% tax rate??
    Tax wise on your earnings yes, your combined Personal Allowance and (extended) basic rate band is £63,770 so no higher rate tax would be payable on earnings of £63,562.

    And if you had no other taxable income you would also be one eligibile for Marriage Allowance which could possibly save you £252.
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