Income tax doubled mid-year

ender4

Hi, 

I just wanted to see if i'm missing anything obvious before i have to call HMRC and try and get them to help.

I'm salaried on PAYE only, no income from anywhere else. Tax code has remained exactly the same all year at 1257L. 

My salary has not changed during the year, though i did get a bonus in April which i put a big chunk into my salary sacrifice pension.

May 2024 to Sept 2024 - I was paying £321 income tax per month on my payslip. 
Oct 2024 to Jan 2025 - I received exactly the same monthly gross salary, paid the same NI and same payment to salary sacrifice pension, but my income tax payments went to £679 per month. No change in tax code.


I've asked HR and our payroll people at work, they are stumped and say they they haven't changed anything.

What could have changed during October to almost double my monthly income tax? 

eskbanker

Is it possible you're getting into higher rate tax - what's your likely taxable income across the full tax year, including whatever you didn't sal sac from your bonus?  Is it possible that you were being undertaxed earlier rather than overtaxed now?

ender4

eskbanker said:

Is it possible you're getting into higher rate tax - what's your likely taxable income across the full tax year, including whatever you didn't sal sac from your bonus?  Is it possible that you were being undertaxed earlier rather than overtaxed now?

I'm aiming to have my taxable income at £99,999 by year-end, by salary sacrificing a monthly amount into pension. 

I wonder if HMRC think i'm going to be over £100k by year-end as they don't know/care i'm putting extra into my pension?  It's weird that they changed the tax from October onwards though.  

Do i just let it go for the final 2 months and then try and work out if i was taxed correctly for the whole year?

DE_612183

Tax of £321 is from a salary of about just under £32k, for £679 it's about £52ish.

ender4

DE_612183 said:

Tax of £321 is from a salary of about just under £32k, for £679 it's about £52ish.

Oh wow, so i'm well underpaying tax at both amounts! Can HMRC get it completely wrong, i thought they automatically calculate the correct income tax?

DE_612183

no, your payroll *should* automatically calculate the tax based on HMRC rules.

have you checked your personal tax account online which will show your estimated income for the year.

as an aside - how much is your gross?

With income tax at about 20% with a salary of £100,000 you should be paying about £2,285 tax per month.

eskbanker

ender4 said:

eskbanker said:

Is it possible you're getting into higher rate tax - what's your likely taxable income across the full tax year, including whatever you didn't sal sac from your bonus?  Is it possible that you were being undertaxed earlier rather than overtaxed now?

I'm aiming to have my taxable income at £99,999 by year-end, by salary sacrificing a monthly amount into pension. 

I wonder if HMRC think i'm going to be over £100k by year-end as they don't know/care i'm putting extra into my pension?  It's weird that they changed the tax from October onwards though.  

Do i just let it go for the final 2 months and then try and work out if i was taxed correctly for the whole year?

I'd suggest that you don't, and that you try to get to the bottom of it sooner rather than later, as adjusting your income to avoid loss of personal allowance might need some finessing....  As with above posts, I can't reconcile the high salary and low monthly tax, so more digging needed!

400ixl

Also remember that if trying to stay under £100k, you need to consider all taxable income which include things like the interest on savings over £500 at that level.

ender4

DE_612183 said:

no, your payroll *should* automatically calculate the tax based on HMRC rules.

have you checked your personal tax account online which will show your estimated income for the year.

as an aside - how much is your gross?

With income tax at about 20% with a salary of £100,000 you should be paying about £2,285 tax per month.

Ahhh, i think it's making a bit more sense now. The online personal tax account did show something like £125k earlier in the tax year, but i did change it a few months ago to estimated £99,999.

£87k taxable income earned so far after salary sacrifice and paid £24k income tax so far.

I seem to have paid a massive chunk of tax in the early month when i received my bonus. HMRC must have thought i was going to earn that much every month.  Then they undercharged me for a few months as they realised that was a one-off, then mid-year they may have worked out my full year and started charging on that basis.  

If i ignore the month to month tax and just look at year to date figures, it seems it might just work out correctly by year-end.

Hoenir

ender4 said:

eskbanker said:

Is it possible you're getting into higher rate tax - what's your likely taxable income across the full tax year, including whatever you didn't sal sac from your bonus?  Is it possible that you were being undertaxed earlier rather than overtaxed now?

I'm aiming to have my taxable income at £99,999 by year-end, by salary sacrificing a monthly amount into pension. 

I wonder if HMRC think i'm going to be over £100k by year-end as they don't know/care i'm putting extra into my pension?  It's weird that they changed the tax from October onwards though.  

Do i just let it go for the final 2 months and then try and work out if i was taxed correctly for the whole year?

Your payroll department will using approved HMRC payroll software. Whatever is occurring is likely to be of your own making. Amending your salary sacrifice amounts will be impacting your taxable income. By month 12, March 2025. You will have paid the correct amount of income tax on your total taxable salary for the tax year. 

eskbanker

ender4 said:
I seem to have paid a massive chunk of tax in the early month when i received my bonus. HMRC must have thought i was going to earn that much every month.  Then they undercharged me for a few months as they realised that was a one-off, then mid-year they may have worked out my full year and started charging on that basis.

HMRC don't charge tax as such - that's your employer's role, albeit using coding info supplied by HMRC.  As above, standard payroll software will have driven the calculation of the monthly deductions, rather than HMRC doing so....