Understanding Tax code/net pay

cjp2308

Wonder if someone can explain this to me please - tried getting through to HMRC on the phone, but was on hold for 30 mins only for the line to cut off

Previous months

Gross pay

£3,333.33

Tax paid

£384.00

Net pay

£2,599.83

Tax code

C1495L

This month

Gross pay

£3,753.33

Tax paid

£893.40

Net pay

£2,476.83

Tax code

C1263L

Obviously there has been a reduction in my tax code (I had a mileage relief claim in my previous role which is no longer applicable in my current role)

My gross has increased by £420pm this month due to a payrise, but with this new tax code in place, my net pay has now decreased, will this be the case for the foreseeable or would it just be until the new financial year?

Thanks in advance.

chrisbur

This looks like your tax code may have been applied back to the start of the tax year, not normally something HMRC do.  Can you advise tax month taxable gross to date and tax paid to date from latest payslip for 3753.33

Albermarle

If you have to call them, then best to call at 08.00 when the lines open. 

cjp2308

chrisbur said:

This looks like your tax code may have been applied back to the start of the tax year, not normally something HMRC do.  Can you advise tax month taxable gross to date and tax paid to date from latest payslip for 3753.33

YTD tax paid £5128.60
Gross for tax £37 229.53

Is that what you asked for?

Thanks again

cjp2308

chrisbur said:

This looks like your tax code may have been applied back to the start of the tax year, not normally something HMRC do.  Can you advise tax month taxable gross to date and tax paid to date from latest payslip for 3753.33

Or maybe gross for tax 3586.66

chrisbur

The first figures were the ones that I wanted and I can confirm that your code of C1263L was applied on a cumulative basis.  This in affect meant that all your earnings back to the beginning of the tax year were recalculated using C1263L, resulting in extra tax for this month.  As I said usual practise when HMRC issue a lower tax code is to issue it on a non-cumulative basis so that it is applied only to that month's salary.  
In the first instance might be worth checking with your payroll dept. to see if HMRC did issue a non-cumulative tax code which somehow got entered into their system as cumulative. 
Your tax next month will not be affected and if gross is again £3753.33 you will be taxed £540 or thereabouts.

If you do contact HMRC (assuming they issued a cumulative code ) not sure if it will get sorted in time for tax year end but if not when HMRC have all earnings details and mileage relief details any overpaid tax will be refunded, though cannot say when that will be.

cjp2308

chrisbur said:

The first figures were the ones that I wanted and I can confirm that your code of C1263L was applied on a cumulative basis.  This in affect meant that all your earnings back to the beginning of the tax year were recalculated using C1263L, resulting in extra tax for this month.  As I said usual practise when HMRC issue a lower tax code is to issue it on a non-cumulative basis so that it is applied only to that month's salary.  
In the first instance might be worth checking with your payroll dept. to see if HMRC did issue a non-cumulative tax code which somehow got entered into their system as cumulative. 
Your tax next month will not be affected and if gross is again £3753.33 you will be taxed £540 or thereabouts.

If you do contact HMRC (assuming they issued a cumulative code ) not sure if it will get sorted in time for tax year end but if not when HMRC have all earnings details and mileage relief details any overpaid tax will be refunded, though cannot say when that will be.

Thanks again, so essentially nothing I need to do really and from next month my net pay will increase? It was a bit of a shock and technically I had a pay rise this month only to see my net pay £100+ lower than normal 

Dazed_and_C0nfused

cjp2308 said:

chrisbur said:

The first figures were the ones that I wanted and I can confirm that your code of C1263L was applied on a cumulative basis.  This in affect meant that all your earnings back to the beginning of the tax year were recalculated using C1263L, resulting in extra tax for this month.  As I said usual practise when HMRC issue a lower tax code is to issue it on a non-cumulative basis so that it is applied only to that month's salary.  
In the first instance might be worth checking with your payroll dept. to see if HMRC did issue a non-cumulative tax code which somehow got entered into their system as cumulative. 
Your tax next month will not be affected and if gross is again £3753.33 you will be taxed £540 or thereabouts.

If you do contact HMRC (assuming they issued a cumulative code ) not sure if it will get sorted in time for tax year end but if not when HMRC have all earnings details and mileage relief details any overpaid tax will be refunded, though cannot say when that will be.

Thanks again, so essentially nothing I need to do really and from next month my net pay will increase? It was a bit of a shock and technically I had a pay rise this month only to see my net pay £100+ lower than normal 

You have essentially paid all the tax owed from having too high a tax code in one go.

Not ideal but arguably keeps life simpler!

cjp2308

Dazed_and_C0nfused said:

cjp2308 said:

chrisbur said:

The first figures were the ones that I wanted and I can confirm that your code of C1263L was applied on a cumulative basis.  This in affect meant that all your earnings back to the beginning of the tax year were recalculated using C1263L, resulting in extra tax for this month.  As I said usual practise when HMRC issue a lower tax code is to issue it on a non-cumulative basis so that it is applied only to that month's salary.  
In the first instance might be worth checking with your payroll dept. to see if HMRC did issue a non-cumulative tax code which somehow got entered into their system as cumulative. 
Your tax next month will not be affected and if gross is again £3753.33 you will be taxed £540 or thereabouts.

If you do contact HMRC (assuming they issued a cumulative code ) not sure if it will get sorted in time for tax year end but if not when HMRC have all earnings details and mileage relief details any overpaid tax will be refunded, though cannot say when that will be.

Thanks again, so essentially nothing I need to do really and from next month my net pay will increase? It was a bit of a shock and technically I had a pay rise this month only to see my net pay £100+ lower than normal 

You have essentially paid all the tax owed from having too high a tax code in one go.

Not ideal but arguably keeps life simpler!

Managed to speak with HMRC on live chat - they confirmed that's the case and tax level should revert to normal after this month, so hopefully everything will be fine moving forward