Changing Estimated Income for Income Tax

joedyer123

Hi all,

I work in a commission based job where I have a basic salary of 35k and I am paid quarterly bonuses/commission in April, July, October and January. 

My April bonus was circa 5k, my July bonus will be circa 15k and while impossible to tell at this stage, based on targets I would estimate that my October and January ones will be around 7/8k each.

I rang HMRC clarifying a few questions about tax codes etc and they advised changing my “estimated” earnings on the HMRC app. This is currently down as 33k (I recently went from basic 32k to 35k so I assume this set as 33k as it’s somewhere between those?). 

The person I spoke to at HMRC said changing my estimated income (to circa 70k based on the above figures) would be beneficial in that I don’t *potentially* get taxed extra in 26/27 (and/or have my tax code massively drop from April 2026 - it’s already low at 1203L as it is), however it could cause my tax code to drop further in the interim to reflect my estimate going up hugely from 33k to 70k.

My question is should I change my estimated income on the HMRC app based on anyone else’s previous experiences? 

My April, May and June payslips have evened out in the sense that total pre-tax earnings for those 3 months replicated over 12 months and put into a tax calculator online show that I have pretty much paid what I should have so far this tax year so not sure the point in changing my estimated earnings if HMRC works it out/adjusts as the year goes by anyway?

Thanks in advance!

molerat

Changing your estimated income is only really necessary in a few circumstances -

more than one employment / income stream

an income in excess of £100K

an income in a higher tax bracket and have savings interest income - which would also need to be correctly notified - or are in receipt of the marriage allowance

In those cases you would possibly underpay tax if HMRC were not made aware of the correct income.

If none of those apply then PAYE will take care of deducting the correct amount of tax irrespective of the estimate entered.

Dazed_and_C0nfused

joedyer123 said:

Hi all,

I work in a commission based job where I have a basic salary of 35k and I am paid quarterly bonuses/commission in April, July, October and January. 

My April bonus was circa 5k, my July bonus will be circa 15k and while impossible to tell at this stage, based on targets I would estimate that my October and January ones will be around 7/8k each.

I rang HMRC clarifying a few questions about tax codes etc and they advised changing my “estimated” earnings on the HMRC app. This is currently down as 33k (I recently went from basic 32k to 35k so I assume this set as 33k as it’s somewhere between those?). 

The person I spoke to at HMRC said changing my estimated income (to circa 70k based on the above figures) would be beneficial in that I don’t *potentially* get taxed extra in 26/27 (and/or have my tax code massively drop from April 2026 - it’s already low at 1203L as it is), however it could cause my tax code to drop further in the interim to reflect my estimate going up hugely from 33k to 70k.

My question is should I change my estimated income on the HMRC app based on anyone else’s previous experiences? 

My April, May and June payslips have evened out in the sense that total pre-tax earnings for those 3 months replicated over 12 months and put into a tax calculator online show that I have pretty much paid what I should have so far this tax year so not sure the point in changing my estimated earnings if HMRC works it out/adjusts as the year goes by anyway?

Thanks in advance!

Yes, it would be sensible to do so.

No one knows how much you are likely to earn as accurately as you do.  So even though it's just an estimate it's a better than estimate than HMRC could ever calculate as you are aware of what is likely to happen.  HMRC only know what has already happened, and usually base things on that.

Without knowing the details of any other income you have and the breakdown of why your code is 1203L it's difficult to know what impact this would have but it can result in an improved (higher) tax code, not just a worse one.