Is my tax correct

strawb_shortcake

I usually use UK salary calculator and find it to be usually very accurate, but I think this time it might be wrong.

I'm also not good with maths or numbers, so part of this is to aid my understanding too.

Last month I was paid a £2203 annual bonus. My normal salary is £49843. Tax code 1257L and I'm in Alpha pension paying 5.45% contributions.

UK salary calculator said I should pay 1016.57 tax but may find an extra £388.18 is deducted due to the higher rate tax, but this is usually refunded in future months.

I actually paid £1299.20

I have tried using Google AI and I just keep getting different numbers.

Have I paid the right amount or too much/little?

To complicate it a little more at the end of August I should receive a pay increase of £1670 and receive I believe £507 in back pay which may then change my tax again?

Any help much appreciated

Thank you

sheramber

What was your taxable pay on your payslip and what month ?

strawb_shortcake

https://forums.moneysavingexpert.com/discussion/comment/82080194#Comment_82080194

Taxable pay was £6130.21 and month 3 as was paid at end of June

molerat

A quick back of fag packet calculation using the basic info provided puts that spot on. The bonus has put you into higher rate tax for this point in the year and will stay that way, though reducing how far in month on month, until November. Each month you will get a little bit of that tax back until you are back paying the "normal" amount in January - you usually pay around £575 tax and going forward you will pay around £523 tax.

strawb_shortcake

https://forums.moneysavingexpert.com/discussion/comment/82080222#Comment_82080222

Thank you, I was getting myself more confused the more I tried to work it out. I didn't really think I could under pay tax on PAYE, I've also never knowingly had a tax rebate - UK salary... teased me that my first might have been incoming, but I guess it is in small steps.

chrisbur

The UK salary calculator based its calculation on you receiving the bonus plus your usual salary and worked out the tax due using your code on a month 1 basis. This meant that it took no account of unuased 20% band allowance for earliuer tax months or for tax months yet to be paid. All except one tax calculator that I know of have their limitations, a bonus payment is often one of those limitations. The best one to use is the one provided by HMRC which providing you input the correct details ( it needs taxable gross ) will always give you the answer that PAYE will give.

https://www.gov.uk/guidance/work-out-an-employees-income-tax

UKTaxHelper

On the pay rise bit that nobody has picked up yet, £49,843 plus the £1,670 gets you to roughly £51,500, which looks like it tips you into higher rate. It probably doesn't, because your alpha contributions come off before the tax is worked out, so the taxable figure is nearer £48,700 and you stay basic rate. The back pay all lands in one month though, so that month will look heavy again the same way the bonus month did, then it settles down over the months after.