Tax Calculator - MSE v HMRC

GarethEvs

I have done the tax calculation both on the MSE and HMRC sites. The HMRC comes out with a higher tax to pay. Does anyone know why this maybe. I have inputted the same information on both.

Dazed_and_C0nfused

Pension contributions are the likely issue.

There are multiple methods of contributing to a pension and they all work slightly differently so unless you understand that and how the calculator has been designed it's not always easy to get the correct result.

chrisbur

I have had a look at these and can confirm that provided you put the same figure in for each and make no entry for pension in the MSE calculator then you get a tax figure for each that does not vary by a lot.  The small difference is because to the MSE calculator does not use the same tax allowance figure as is used for PAYE.
The MSE calculator then does something weird if you do use the pension section.
It says that "This assumes you pay your pension from NET pay and thus get tax relief on contribution from HMRC"
If you enter a figure here then the calculator shows the amount that HMRC will pay to your pension provider, so for example I entered pay of £2000 a month and 5% pension £100 and it showed pension added by HMRC as £20 all fine to here, you have paid £100 and HMRC £20 so £120 to your pension.
But then for some reason the MSE calculator has adjusted the tax figure, Their tax calc with pension has been reduced by £20  In my example tax without pension was £191 and tax with pension became £171.
In fact as the pension is coming from the net pay the tax deducted should not be different, the tax should only change if the pension is being deducted from gross pay, when you would have £100 going into your pension and pay £20 less tax.
The MSE calculator gives the impression that you get both the £20 added to your pension and reduced from your tax. 
The GOV.UK calculator (I assume this one https://www.tax.service.gov.uk/estimate-paye-take-home-pay/your-pay  )makes no allowance for any sort of pension so that is going to give the wrong answer to some.


 

[Deleted User]

chrisbur said:

I have had a look at these and can confirm that provided you put the same figure in for each and make no entry for pension in the MSE calculator then you get a tax figure for each that does not vary by a lot.  The small difference is because to the MSE calculator does not use the same tax allowance figure as is used for PAYE.
The MSE calculator then does something weird if you do use the pension section.
It says that "This assumes you pay your pension from NET pay and thus get tax relief on contribution from HMRC"
If you enter a figure here then the calculator shows the amount that HMRC will pay to your pension provider, so for example I entered pay of £2000 a month and 5% pension £100 and it showed pension added by HMRC as £20 all fine to here, you have paid £100 and HMRC £20 so £120 to your pension.
But then for some reason the MSE calculator has adjusted the tax figure, Their tax calc with pension has been reduced by £20  In my example tax without pension was £191 and tax with pension became £171.
In fact as the pension is coming from the net pay the tax deducted should not be different, the tax should only change if the pension is being deducted from gross pay, when you would have £100 going into your pension and pay £20 less tax.
The MSE calculator gives the impression that you get both the £20 added to your pension and reduced from your tax. 
The GOV.UK calculator (I assume this one https://www.tax.service.gov.uk/estimate-paye-take-home-pay/your-pay  )makes no allowance for any sort of pension so that is going to give the wrong answer to some.


 

Hard to see why this is. Pedantically, would a £100 net contribution in a relief at source scheme not result in an HMRC top up of £25? 

chrisbur

[Deleted User] said:

chrisbur said:

I have had a look at these and can confirm that provided you put the same figure in for each and make no entry for pension in the MSE calculator then you get a tax figure for each that does not vary by a lot.  The small difference is because to the MSE calculator does not use the same tax allowance figure as is used for PAYE.
The MSE calculator then does something weird if you do use the pension section.
It says that "This assumes you pay your pension from NET pay and thus get tax relief on contribution from HMRC"
If you enter a figure here then the calculator shows the amount that HMRC will pay to your pension provider, so for example I entered pay of £2000 a month and 5% pension £100 and it showed pension added by HMRC as £20 all fine to here, you have paid £100 and HMRC £20 so £120 to your pension.
But then for some reason the MSE calculator has adjusted the tax figure, Their tax calc with pension has been reduced by £20  In my example tax without pension was £191 and tax with pension became £171.
In fact as the pension is coming from the net pay the tax deducted should not be different, the tax should only change if the pension is being deducted from gross pay, when you would have £100 going into your pension and pay £20 less tax.
The MSE calculator gives the impression that you get both the £20 added to your pension and reduced from your tax. 
The GOV.UK calculator (I assume this one https://www.tax.service.gov.uk/estimate-paye-take-home-pay/your-pay  )makes no allowance for any sort of pension so that is going to give the wrong answer to some.


 

Hard to see why this is. Pedantically, would a £100 net contribution in a relief at source scheme not result in an HMRC top up of £25? 

Good point £125  gross at 20% tax gives £100 to net and £25 to tax not £20.
So wrong on the top up and the tax figure given.