Employed (PAYE) £900 Tax Bill !!! 4 week/24 year anomally
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unholyangel wrote: »Someones bound to disagree with my phrasing but in the interests of trying to help you understand.....tax works on a system of apportioning. So your allowance is split based on how frequently you're paid. In your case, your personal allowance of 11950 (could be 11950-11959 but 950 is more likely imo with a lot of Flat Rate Expenses being £100) divided by 13 (how many pay periods would be in a normal year). But in that year you received 14 pays. So the last pay would be liable for tax wholly at 40% with no allowances and no basic rate (since they would have been fully used in the previous 13 weeks).
So your allowance was £920 (rounded up slightly for ease) every 4 weeks and basic rate band apportioned was 2654.
So you should have paid 40% on the £920 you paid 0% on. And you should have paid 40% on the £2654 you paid 20% on. Add those together and you will come within about £4 of what you have quoted, which can easily be explained again by the way its calculated.
Hope that helps.
Thank you for your help, when you say I should have paid 40% on the £920 are you talking about the 14th pay ?0 -
It really is about time HMRC only accepted payroll systems which took into account the 53/54 week/13 & 14 x 4-weekly payment systems. It is totally unacceptable that people get landed with these bills because their employers are unable to use a system which takes them into account. Even I, whose only programming experience was nearly 50 years ago, know that it is possible to program(me) these issues in.
But after all I guess it is far easier to p*** people off & blame someone else than it is to actually deal with a problem.0 -
Thank you for your help, when you say I should have paid 40% on the £920 are you talking about the 14th pay ?
Yes, just the 14th/w56 payment. The other 13 payments, it was correct that the £920 was 0%.It really is about time HMRC only accepted payroll systems which took into account the 53/54 week/13 & 14 x 4-weekly payment systems. It is totally unacceptable that people get landed with these bills because their employers are unable to use a system which takes them into account. Even I, whose only programming experience was nearly 50 years ago, know that it is possible to program(me) these issues in.
But after all I guess it is far easier to p*** people off & blame someone else than it is to actually deal with a problem.
The issue is that its not going to occur in the same year for everyone as it really depends on what date the employer pays them and how frequently. Also, not all employers use HMRC software. It would also result in them paying more tax every pay during that year than they would otherwise.
It doesnt ever happen for calendar monthly because a year can be divided perfectly into 12 months (given that months aren't of equal length). It only ever happens when the pay frequency is weekly (or a multiple thereof) due to a year being 365.24 days - which cannot be perfectly divided by 7.You keep using that word. I do not think it means what you think it means - Inigo Montoya, The Princess Bride0 -
It really is about time HMRC only accepted payroll systems which took into account the 53/54 week/13 & 14 x 4-weekly payment systems. It is totally unacceptable that people get landed with these bills because their employers are unable to use a system which takes them into account. Even I, whose only programming experience was nearly 50 years ago, know that it is possible to program(me) these issues in.
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How would this be done?0 -
How would this be done?
By the simple inclusion of questions such as
What is this employees payment interval?
What is this employees first payment date?
System shows how many payment intervals it thinks there are.
Correct yes or no?
If all employees are paid at the same start date & payment interval it is even easier. System just divides allowance by appropriate number.
Any co only paying monthly would not need this amendment but those paying weekly, fortnightly or four-weekly would.
For any half way decent programmer this is not rocket science.
This would actually save HMRC a fair bit of money having to contact those who have underpaid through no fault of their own & save their people on the phone having to answer how someone could possibly owe money when they have always paid via PAYE. Also save a company's HR dept having to answer questions from employees about why they owe money.
Sorting this would seem like an all round win to me!0 -
By the simple inclusion of questions such as
What is this employees payment interval?
What is this employees first payment date?
System shows how many payment intervals it thinks there are.
Correct yes or no?
If all employees are paid at the same start date & payment interval it is even easier. System just divides allowance by appropriate number.
Any co only paying monthly would not need this amendment but those paying weekly, fortnightly or four-weekly would.
For any half way decent programmer this is not rocket science.
This would actually save HMRC a fair bit of money having to contact those who have underpaid through no fault of their own & save their people on the phone having to answer how someone could possibly owe money when they have always paid via PAYE. Also save a company's HR dept having to answer questions from employees about why they owe money.
Sorting this would seem like an all round win to me!
To keep the following simpler I have just taken the example of someone paid every four weeks.
If I understand this correctly the result of this would be that the employee would, if this was operated, pay the extra tax that is currently carried forward, spread evenly over the 14 pay days in the tax year.
To me this does not sound very different as far as the employee is concerned to the system used at the moment where it is spread over the 13 pay days of a later tax year.
Would you not still get people querying their tax due to the extra being paid for the year affected.
Would the system actually change the tax code or just change the tax deducted? If the tax code was changed a leaver would then have the wrong tax code on their P45 which would require correction by HMRC If the tax deducted was changed they would have a tax deduction figure that did not agree with their taxable gross. This would result in a wrong tax figure being used by the new employer until HMRC had confirmed that the P45 figure was correct.
Any new starters during the year that this occurred would be querying their tax; their extra would be greater the nearer they were to the tax year end.0 -
unholyangel wrote: »Yes, just the 14th/w56 payment. The other 13 payments, it was correct that the £920 was 0%.
The issue is that its not going to occur in the same year for everyone as it really depends on what date the employer pays them and how frequently. Also, not all employers use HMRC software. It would also result in them paying more tax every pay during that year than they would otherwise.
It doesnt ever happen for calendar monthly because a year can be divided perfectly into 12 months (given that months aren't of equal length). It only ever happens when the pay frequency is weekly (or a multiple thereof) due to a year being 365.24 days - which cannot be perfectly divided by 7.
Not to keep on but i don't understand, I have paid tax on every bit of money I have earned, usually £800-£900 every 4 weeks, on every single pay date (14th included) I am struggling to understand how I owe them £900.0 -
It sounds like it's time for some actual detail.
How were you notified of the £903? Was it a P800 calculation?
Can you post details of your week 48, 52 and 56 payslips? Tax code, taxable pay in period, tax deducted in period, cumulative taxable pay and cumulative tax paid should be a start.0 -
Not to keep on but i don't understand, I have paid tax on every bit of money I have earned, usually £800-£900 every 4 weeks, on every single pay date (14th included) I am struggling to understand how I owe them £900.
Exactly - you paid the same as normal, you should have paid a lot more. Take what your w56 taxable pay was, multiple that by 0.4 and thats how much tax you should have paid. Now deduct what you did pay and allow about £4 for error (if the extra in your code is flat rate expenses at £100 then its likely £3.87 you need to add) and that should give you 903.17.You keep using that word. I do not think it means what you think it means - Inigo Montoya, The Princess Bride0 -
unholyangel explained it quite concisely in post #10. You had already used up your full tax allowance for the year by period 13. Your employer gave you another 1/13th in period 14 meaning you owed lots of 40% tax. If you were paid monthly this would not occur.Not to keep on but i don't understand, I have paid tax on every bit of money I have earned, usually £800-£900 every 4 weeks, on every single pay date (14th included) I am struggling to understand how I owe them £900.0
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