Newbie - Wrong Tax code?

Ilovetoby

Hello - I hope someone can help me understand if I'm paying too much tax. I returned from Maternity leave in November. (SMP from Jan 22nd for 26 weeks) and then unpaid maternity from 23rd July til 5th November. Since I've been back I've had so much tax deducted, I'm seriously thinking of giving up work. I'm not entitled to Child Care Tax Credit. My Working Tax credit of £70+ a month is going to stop next month. My Tax Code is 484L and since November I've paid well over £1000. Can anyone advise? Local Tax Office is far too busy - I've just been on hold for 10 mins. Gave up! Thanks

System

From 6 April 2007 to 5 April 2008 anyone under 65 is entitled to earn £5225 before tax becomes due. This usually means a tax code of 522l. If your tax code is 484l that would lead me to believe they are collecting an underpayment of tax from an earlier year through your code or you receive taxable benefits (medical, car, fuel etc) from your employer and they have been included in your tax code.

If you want us to calculate if too much has been taken off you it would be helpful if you could post your year to date income and tax paid figures.

Incidentally why are you not entitled to Child Tax credit (CTC)? You normally get awarded the baby element, child element and family element of CTC when you have children though that can be tapered away according to your household income.

Ilovetoby

Hi Pam 17. Thankyou for your prompt response. So far my Gross Pay has been 7805.63. I've paid 605.07 tax 534.31 NI. I'm paying £20 a month into a company pension aswell as paying back £20 a month from when I was on maternity. As for benefits - I believe we have Bupa cover - I can dig out my P60 if needs be. And they pay for AA road cover. That's it. No company car, no fuel allowance. I'm just concerned that each month since I've been back they're taking more and more off me.1st month (nov) 21.80 (great I thought!) then 218.52 and now 334.75. and that's just the tax! Over £100 extra out of my wage. No good for trying to budget!
As for CTC, I was informed that my last payment will be in Feb. Need to sort that out. Employer not rushing to set up my Childcare Tax Vouchers either. Sorry - all new to me! As I've quickly found out, you don't get if you don't ask! Once again - thanks Pam 17.

tigtag02

Ilovetoby

How much tax do you think you should be paying? To be fair the above deductions are not excessive.

Does the £7805.63 include your SMP?
Either way if thats your gross figure to Dec then you have still underpaid tax to date.
Aprrox £100 if SMP is included in above figure and aprrox £500 if not.

chrisbur

On taxable gross of £7805.63 as at month 10 (Payday falls from Jan 6 to Feb 5 ) the tax due would be £605.07. So your tax to date is spot on assuming your last pay day was in month 10. This should show somewhere on your payslip. Judging from your tax figures it looks as if you have recieved a monthly salary of just over £2000 per month for the last three months, with the rest being your SMP. As you had very low earnings before restarting work you would have paid no tax as at month 7. When you had your first full salary at month 8 you still had old tax allowance due from previous months and any tax due was all at 10% so you paid only £21.80. In month 9 you still had some old 10% allowance left but you were also paying a little now at 22% so paid the £218.52. In month 10 you no longer had any old 10% allowance left just the bit you get every month so now nearly all of the tax you paid was at 22% and you paid £334.75. This is about the rate you will be paying every month from now. If I have guessed wrong on month or salary let me know and I will have another look at it.

As to your tax code the differance is almost certainly due to your BUPA and AA membership. To check these you need to have a look at your notice of codeing from the tax office. Any benefit like this has to be taxed and it is done by reducing your tax code, which means that you are paying tax on an extra £340 compared to someone who does not have these benefits.

Regarding your NI can only really check that if you advise each monthly gross and what NI rate you pay. It will proberbly be either A or D and will be somewhere on your payslip. However if the figures I have guessed at are about right it looks correct for an A rate of NI.

tigtag02

Thanks Chris - I never thought to calculate at month 10 :rolleyes: and of course this makes in spot on

Ilovetoby

Thanks to chrisbur and tigtag02. Big help! Especially about how my code changes with any benefits I get at work. I guess I was expecting to pay less tax as I wasn't working for nearly all of last year. Thank you!