Wrong tax taken from wages

purpleparrotuk

Dazed_and_C0nfused said:

purpleparrotuk said:

Thanks for all your comments. I didn’t notice quite a few of them. Just to update this thread, it was the HMRC that entered the vehicle as a non EV thus paying the higher BIK. The P46 was correctly filled out by the employer.  It’s now been changed and the tax code has gone back to a slightly lower one than the before the salary sacrifice started. I am guessing to allow for the BIK tax to be taken. Just need to make sure we are paid back the £300 that was incorrectly taken at the higher BIK this month. 

The employer can only make a tax adjustment if the new tax code was issued on a cumulative basis and not a non cumulative basis (sometimes referred to as week 1/month 1 basis).

Thanks. It was a week 1 month 1 tax code on his pay slip. So what should we do? Will the tax office sort it out without intervention?

Dazed_and_C0nfused

purpleparrotuk said:

Dazed_and_C0nfused said:

purpleparrotuk said:

Thanks for all your comments. I didn’t notice quite a few of them. Just to update this thread, it was the HMRC that entered the vehicle as a non EV thus paying the higher BIK. The P46 was correctly filled out by the employer.  It’s now been changed and the tax code has gone back to a slightly lower one than the before the salary sacrifice started. I am guessing to allow for the BIK tax to be taken. Just need to make sure we are paid back the £300 that was incorrectly taken at the higher BIK this month. 

The employer can only make a tax adjustment if the new tax code was issued on a cumulative basis and not a non cumulative basis (sometimes referred to as week 1/month 1 basis).

Thanks. It was a week 1 month 1 tax code on his pay slip. So what should we do? Will the tax office sort it out without intervention?

He won't lose our overall but you can ask for the code to be issued on a cumulative basis if you want.

You should use HMRC's PAYE calculator to check the impact this will have first though as the first month's pay will have whatever adjustment is needed to being things back up to date.

Leaving it on the week 1/month 1 basis might be the prudent option.  

purpleparrotuk

Dazed_and_C0nfused said:

purpleparrotuk said:

Dazed_and_C0nfused said:

purpleparrotuk said:

Thanks for all your comments. I didn’t notice quite a few of them. Just to update this thread, it was the HMRC that entered the vehicle as a non EV thus paying the higher BIK. The P46 was correctly filled out by the employer.  It’s now been changed and the tax code has gone back to a slightly lower one than the before the salary sacrifice started. I am guessing to allow for the BIK tax to be taken. Just need to make sure we are paid back the £300 that was incorrectly taken at the higher BIK this month. 

The employer can only make a tax adjustment if the new tax code was issued on a cumulative basis and not a non cumulative basis (sometimes referred to as week 1/month 1 basis).

Thanks. It was a week 1 month 1 tax code on his pay slip. So what should we do? Will the tax office sort it out without intervention?

He won't lose our overall but you can ask for the code to be issued on a cumulative basis if you want.

You should use HMRC's PAYE calculator to check the impact this will have first though as the first month's pay will have whatever adjustment is needed to being things back up to date.

Leaving it on the week 1/month 1 basis might be the prudent option.  

His new tax code is 1149L so he is not on the month 1 thing any more. So should he just get the money back in his next wages?

Dazed_and_C0nfused

purpleparrotuk said:

Dazed_and_C0nfused said:

purpleparrotuk said:

Dazed_and_C0nfused said:

purpleparrotuk said:

Thanks for all your comments. I didn’t notice quite a few of them. Just to update this thread, it was the HMRC that entered the vehicle as a non EV thus paying the higher BIK. The P46 was correctly filled out by the employer.  It’s now been changed and the tax code has gone back to a slightly lower one than the before the salary sacrifice started. I am guessing to allow for the BIK tax to be taken. Just need to make sure we are paid back the £300 that was incorrectly taken at the higher BIK this month. 

The employer can only make a tax adjustment if the new tax code was issued on a cumulative basis and not a non cumulative basis (sometimes referred to as week 1/month 1 basis).

Thanks. It was a week 1 month 1 tax code on his pay slip. So what should we do? Will the tax office sort it out without intervention?

He won't lose our overall but you can ask for the code to be issued on a cumulative basis if you want.

You should use HMRC's PAYE calculator to check the impact this will have first though as the first month's pay will have whatever adjustment is needed to being things back up to date.

Leaving it on the week 1/month 1 basis might be the prudent option.  

His new tax code is 1149L so he is not on the month 1 thing any more. So should he just get the money back in his next wages?

It might be "money back" in the sense of a refund, it's more likely to be a smaller tax deduction that month, resulting in more take home pay.

But as ever the devil is in the detail and without knowing the latest payslip info and expected taxable pay on his next payslip it's impossible to know for certain.

Penguin_

purpleparrotuk said:

Thanks for all your comments. I didn’t notice quite a few of them. Just to update this thread, it was the HMRC that entered the vehicle as a non EV thus paying the higher BIK. The P46 was correctly filled out by the employer.  It’s now been changed and the tax code has gone back to a slightly lower one than the before the salary sacrifice started. I am guessing to allow for the BIK tax to be taken. Just need to make sure we are paid back the £300 that was incorrectly taken at the higher BIK this month. 

I knew it would be. We have had instances here where we have completed a salary sacrifice car as fully EV but HMRC seem intent on having it set as a hybrid.

Glad you got it sorted.

purpleparrotuk

Dazed_and_C0nfused said:

purpleparrotuk said:

Dazed_and_C0nfused said:

purpleparrotuk said:

Dazed_and_C0nfused said:

purpleparrotuk said:

Thanks for all your comments. I didn’t notice quite a few of them. Just to update this thread, it was the HMRC that entered the vehicle as a non EV thus paying the higher BIK. The P46 was correctly filled out by the employer.  It’s now been changed and the tax code has gone back to a slightly lower one than the before the salary sacrifice started. I am guessing to allow for the BIK tax to be taken. Just need to make sure we are paid back the £300 that was incorrectly taken at the higher BIK this month. 

The employer can only make a tax adjustment if the new tax code was issued on a cumulative basis and not a non cumulative basis (sometimes referred to as week 1/month 1 basis).

Thanks. It was a week 1 month 1 tax code on his pay slip. So what should we do? Will the tax office sort it out without intervention?

He won't lose our overall but you can ask for the code to be issued on a cumulative basis if you want.

You should use HMRC's PAYE calculator to check the impact this will have first though as the first month's pay will have whatever adjustment is needed to being things back up to date.

Leaving it on the week 1/month 1 basis might be the prudent option.  

His new tax code is 1149L so he is not on the month 1 thing any more. So should he just get the money back in his next wages?

It might be "money back" in the sense of a refund, it's more likely to be a smaller tax deduction that month, resulting in more take home pay.

But as ever the devil is in the detail and without knowing the latest payslip info and expected taxable pay on his next payslip it's impossible to know for certain.

Hi Again. I’m still confused how the £300 will be recovered. His new tax code means around £20 more tax a month will be taken out now compared to before the salary sacrifice. Which is the correct account of BIK tax. So how can a smaller tax deduction take place if his tax code is already set? 

sheramber

purpleparrotuk said:

Dazed_and_C0nfused said:

purpleparrotuk said:

Dazed_and_C0nfused said:

purpleparrotuk said:

Dazed_and_C0nfused said:

purpleparrotuk said:

Thanks for all your comments. I didn’t notice quite a few of them. Just to update this thread, it was the HMRC that entered the vehicle as a non EV thus paying the higher BIK. The P46 was correctly filled out by the employer.  It’s now been changed and the tax code has gone back to a slightly lower one than the before the salary sacrifice started. I am guessing to allow for the BIK tax to be taken. Just need to make sure we are paid back the £300 that was incorrectly taken at the higher BIK this month. 

The employer can only make a tax adjustment if the new tax code was issued on a cumulative basis and not a non cumulative basis (sometimes referred to as week 1/month 1 basis).

Thanks. It was a week 1 month 1 tax code on his pay slip. So what should we do? Will the tax office sort it out without intervention?

He won't lose our overall but you can ask for the code to be issued on a cumulative basis if you want.

You should use HMRC's PAYE calculator to check the impact this will have first though as the first month's pay will have whatever adjustment is needed to being things back up to date.

Leaving it on the week 1/month 1 basis might be the prudent option.  

His new tax code is 1149L so he is not on the month 1 thing any more. So should he just get the money back in his next wages?

It might be "money back" in the sense of a refund, it's more likely to be a smaller tax deduction that month, resulting in more take home pay.

But as ever the devil is in the detail and without knowing the latest payslip info and expected taxable pay on his next payslip it's impossible to know for certain.

Hi Again. I’m still confused how the £300 will be recovered. His new tax code means around £20 more tax a month will be taken out now compared to before the salary sacrifice. Which is the correct account of BIK tax. So how can a smaller tax deduction take place if his tax code is already set? 

But his new code is higher than the   K388 M1 one.

When the new code is operated it will  calculate the correct amount of tax due to date , including the next month's pay, and compare it with the tax already paid to date, including the £300.

The   tax will be  overpaid but tax will be due on the current month's pay so the amount overpaid will be used against the tax due first.

Depending how much that is there may be a refund of tax or it may be that less tax than normal is deducted from the current month's pay.

molerat

PAYE works on a cumulative basis, unless an X code is in use it does not tax each pay individually. At next payday the system will work out how much tax is due on the total wage year to date on the new code.  It will then compare that to how much tax has been deducted year to date and take the difference.