Strange taxcode increase for pension and giftaid relief

zagfles

https://forums.moneysavingexpert.com/discussion/comment/82037122#Comment_82037122

Doesn't make any sense then, unless there is some other PAYE income source with a D0 tax code which is the only thing I was thinking would make any sense. Maybe someone else has an idea.

mfn123

Just to give an update before I draw a line under this and get on with my life…

I found the HMRC PAYE calculator at https://www.gov.uk/guidance/work-out-an-employees-income-tax very useful for determining future payments for the various codes, and as suspected, I was wrong to think I would get £250 more net pay in each future payslip.

The 424L tax code was not Month1, so although it meant an £250 less tax in June, that was only because of a correction for overpayments in April and May. The tax for July onwards would only have been £90 less. In other words, I would only have paid £1000 less over the year (i.e. as expected at basic rate from the code change). So… good to understand the figure more, but still would leave me with under 80% paid by PAYE.

Setting that aside, I have now used the 'tell HMRC about other income' facility on PTA to replace the 7700 non-coded income by my expected dividend and interest for 2026-27. The update process produced a new K407 M1 code for July onwards which is much more appropriate. It still doesn't seem quite right, but is good enough for my purposes.

As things currently stand, my K407 M1 payslips from July onwards will take more tax than the June 424L aberration, but only a bit more than April/May K65, and should at least cover my dividend income. Since the expected PAYE tax should now exceed 80% of expected total tax (and the difference is well under £1000 anyway), I think I'll quit while I'm ahead!

If anyone has concerns about this approach, do let me know.