NHS giveth, but HMRC taketh even more away

Swallowinflight · 25 May 2018 at 2:30PM

Hi all, wondering if anyone could help with the following:

I work as a children's nurse at our local hospital, having moved into the area from elsewhere.
A £1,000 golden hello to be paid over 12 months was on offer which I took up. The first £400 installment got taxed outright, so I begrudgingly lost that payment. However, I've just received the final £600, which on top of a lot of overtime has thrown my salary into the next (40%) tax bracket. Though I haven't received my payslip yet, this is almost certainly what has happened to push my wage down so far. Consequently, this has resulted in a net loss all in of all of my unsocial hours I've worked last month, leaving me approx. £200 worse off this month than I was expecting. It's bad enough what pay I've received is what I should expect without working unsocial hours, let alone taking the golden hello.

I was anticipating the golden hello to be taxed on separate pay at 20% rate. This would make sense as an actual financial reward rather than a penalty to push me into the next tax bracket which I am not routinely earning enough to qualify for. This has also meant I've lost more net pay to my student loan and paid more in pension contribution too, neither of which the golden hello should have contributed to - nor which I can claim back.

Claiming the tax back at the end of the financial year is just too far away (we're expecting our first born later this year and need all the financial support we can get right now).

Looking forward, my questions are:

1) What could the NHS/HMRC do to resolve this matter in a timely fashion?

2) In the event of the NHS/HMRC being unable to resolve this pay issue, do I have the grounds to take the NHS to a small claims court for an administrative mistake? This is on the premise it not only mis-sells the golden hello incentive, but through administration has further stripped my earned unsocial hours pay and leaves me only worse off for the month?

Any guidance from those of you who have dealt with similar, or could otherwise advise what my options are would be much valued. I appreciate I don't have my payslip as confirmation yet, though am scoping out what my options are (if any) to reclaim should the above prove to be the case.

Thanks.

Pennywise · 25 May 2018 at 2:41PM

Assuming you're on a "normal" tax code and not a Wk1/Mth1 tax code, the tax will even itself out over the year and you won't need to do anything. Tax should be cumulative during each tax year, so a "high" week/month may mean some of it is taxed at 40% but then you get it back in a later month when you wages are back to low/normal levels.

So, as per your latest payslip, what is your tax code?

Note that the 40% tax is only on the excess over the H/r threshold, not all the wage, so you'd still be taxed mostly at 20% with only some at 40%.

Have you considered other reasons for deductions, such as pension deductions, national insurance, student loan repayments? It's probably not all tax.

Best thing first is once you have your payslip, give HMRC a ring if you're on a Wk1/Mth1 tax code (or it shows as an X) - they'll be able to change your tax code immediately over the phone if it's wrong. You'll also be able to see what other deductions have been taken and whether you've been paid all that you are owed. Without the payslip you're just guessing what's happened.

Dazed_and_confused · 25 May 2018 at 3:17PM

You might not have your payslip yet but you might be able to see some details from it now by looking at your Personal Tax Account on gov.uk.

You can see the payments details your employer has sent to HMRC and this may give you some advance information.

Other than that I would echo what Pennywise says. I think you have a basic misunderstanding of how tax works in the UK and are making assumptions which simply aren't true.

agrinnall · 25 May 2018 at 3:27PM

I'd agree with both Pennywise and D&C that you are misunderstanding the way that tax works, there's no way that a £1000 additional payment could do all of the bad things that you think it has if you are on the correct tax code (and to be honest, I can't really see how it could happen even if you were on the wrong one).

Ja7188 · 25 May 2018 at 5:42PM

A £1,000 golden hello to be paid over 12 months was on offer which I took up. The first £400 installment got taxed outright, so I begrudgingly lost that payment. However, I've just received the final £600, which on top of a lot of overtime has thrown my salary into the next (40%) tax bracket. Though I haven't received my payslip yet, this is almost certainly what has happened to push my wage down so far. Consequently, this has resulted in a net loss all in of all of my unsocial hours I've worked last month, leaving me approx. £200 worse off this month than I was expecting. It's bad enough what pay I've received is what I should expect without working unsocial hours, let alone taking the golden hello.

How did the first £400 get "taxed outright" to the extent that you "lost" it?

In what month was it paid?

How has there been a "net loss" of all your unsocial hours?

I was anticipating the golden hello to be taxed on separate pay at 20% rate. This would make sense as an actual financial reward rather than a penalty to push me into the next tax bracket which I am not routinely earning enough to qualify for. This has also meant I've lost more net pay to my student loan and paid more in pension contribution too, neither of which the golden hello should have contributed to - nor which I can claim back.

You haven't "lost" anything (as others have stated) - so need to worry about this point.

1) What could the NHS/HMRC do to resolve this matter in a timely fashion?

All should be resolved in your next payslip (as others have also stated).

2) In the event of the NHS/HMRC being unable to resolve this pay issue, do I have the grounds to take the NHS to a small claims court for an administrative mistake? This is on the premise it not only mis-sells the golden hello incentive, but through administration has further stripped my earned unsocial hours pay and leaves me only worse off for the month?

What makes you think the NHS have made an "administrative mistake"?

What payment profile was presented with the £1000 golden hello and was it different to the way in which the payments were actually made?

How has the golden hello incentive been "mis-sold"? It's a £1000 payment which is subject to tax in the same way as any other salary payment.

I also don't understand how receiving a £600 payment has left you "worse off" for the month - even if some/ all of it has effectively been taxed at the higher rate, your take home pay should still be much higher than usual.

Others are probably better placed to comment than me, but I somehow doubt that this is something a court would entertain...

John_Jones · 26 May 2018 at 9:12AM

You want to sue your employer because you have to pay tax?

That makes no sense at all. As above, the tax will even itself out over coming months, and it seems very unlikely that you are misunderstanding the current situation too.

agrinnall · 26 May 2018 at 9:23AM

John_Jones wrote: »

...and it seems very unlikely that you are misunderstanding the current situation too.

I'm hoping that's a typo and you really meant likely.

dawyldthing · 27 May 2018 at 10:55PM

Google listentotaxman . Com and put all the details in there. It will show you what up you've been taxed etc when you put the monthly amount in. Plus don't forget if you're in the nest pension that's gone up from 0.8% to 2.4% too from April

Tealblue · 28 May 2018 at 10:06AM

Completely understandable that you're upset and anxious if you've misunderstood how the tax aspect will be handled, especially with a little one on the way to become a new cost centre!

If you aren't reassured by the helpful replies above, try if you can to suspend your worry a bit until you see your payslip/have time to discuss with payroll. You might have a happier bank holiday today.

steampowered · 28 May 2018 at 10:50AM

It is sounding like you might be on the wrong tax code. Which is a relatively easy fix, and would result in you getting the money back on the following payroll.

Just to be clear - if you hit the 40% tax band, you only pay 40% tax on your earnings above the higher rate threshold. You still pay 0% or 20% on the rest of your earnings.

Sorry if you already know that, but you wouldn't be the first person on here to think that everything gets taxed at 40% when you hit the threshold ...

Manxman_in_exile · 28 May 2018 at 5:51PM

I worked In the NHS for over 25 years and nothing the OP has posted makes any sense.

NHS giveth, but HMRC taketh even more away

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