Impact of old job monthly pay schedule affecting tax liability at new job
Comments
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I suggest that you work out for yourself how much tax you SHOULD be paying & make sure that code is correct. This won't work if you earn over £150k! So what you should do!
1. Add up all the gross pay you have received so far this year including September.
2. Work out how much gross pay you will recieve for the last six months of this year (half your annual income).
3. Work out how much tax you have paid so far this year including Sept.
4. Add 1 & 2 together to make your income for the full year & add to that any benefits in kind you may have, a car or health insurance for example.
5. Take £46351 from the total in 4. Multiply the figure you get by 0.4 (40p in the pound).
6. Multiply £34501 by 0.2 (20p in the pound).
7. Add the figures in 5 & 6 together. Then subtract the figure in 3 from this figure. This is the amount of tax that you will owe for the remaining 6 months of the year.
8. Divide this tax due figure by 6. Is this bigger or smaller than the amount you paid for September? If it is bigger than September's tax then you aren't paying enough tax on this new code. If it is smaller than September's tax then you are paying too much tax on this code & it should be increased. If it is very similar then the code is correct.
If you have this information you will have the knowledge to get them to put it right. Without it & you won't know if it is right or wrong until somewhere around Sept NEXT year.0 -
The only benefit in kind I have is health insurance. I pay half and my employer pays the other half. Is the benefit in kind the whole amount?
Am I to factor in pension contributions anywhere in this?0 -
I have run the calculations and it looks like it is all correct. Looks like I’m going to be poorer for the next seven months. I am still puzzled by a few things...
I logged on to HMRC this afternoon and it has all changed again; my tax code has changed to 426LX and the estimated income from my employer has jumped up by approximately £3000 for some reason. Would this be based on my payslip I have just received even though it’s still 4 days before payday? I’m not sure why the estimated gross income would have changed.
Being a bit OCD myself, I ran the model above on my old job and income to project what the situation would’ve been if I hadn’t changed job and that is all correct too. I did this just in case my old employer did something wrong.
Also, there is something else I hadn’t noticed until just now when I checked... My 06 September payslip from my old job for the partial month worked (my final payslip) is as follows...
Salary £1230.77
Holiday £1230.77 - for unused annual leave days
Allowances £10.53
PAYE Tax £9.80
... Why was I taxed so little??If you have this information you will have the knowledge to get them to put it right. Without it & you won't know if it is right or wrong until somewhere around Sept NEXT year.
Why wouldn’t it be until September NEXT year? Surely this situation will have corrected itself by the end of March and I’ll have a normal tax code from April 2019 onwards?
My overall concern is that even with a normal tax code I may somehow be bringing home less net income. I can accept this for the next six months but all of this has frightened me a little and I have no way of figuring out how I will fare next tax year. Going back to the start of all this, I have changed job and my salary has increased, so I expect to be taking home more money as a result. Can someone here help me figure it out?0 -
I have run the calculations and it looks like it is all correct. Looks like I’m going to be poorer for the next seven months. I am still puzzled by a few things...
I logged on to HMRC this afternoon and it has all changed again; my tax code has changed to 426LX and the estimated income from my employer has jumped up by approximately £3000 for some reason. Would this be based on my payslip I have just received even though it’s still 4 days before payday? I’m not sure why the estimated gross income would have changed.
Being a bit OCD myself, I ran the model above on my old job and income to project what the situation would’ve been if I hadn’t changed job and that is all correct too. I did this just in case my old employer did something wrong.
Also, there is something else I hadn’t noticed until just now when I checked... My 06 September payslip from my old job for the partial month worked (my final payslip) is as follows...
Salary £1230.77
Holiday £1230.77 - for unused annual leave days
Allowances £10.53
PAYE Tax £9.80
... Why was I taxed so little??
Why wouldn’t it be until September NEXT year? Surely this situation will have corrected itself by the end of March and I’ll have a normal tax code from April 2019 onwards?
My overall concern is that even with a normal tax code I may somehow be bringing home less net income. I can accept this for the next six months but all of this has frightened me a little and I have no way of figuring out how I will fare next tax year. Going back to the start of all this, I have changed job and my salary has increased, so I expect to be taking home more money as a result. Can someone here help me figure it out?
I am not very well acquainted with the HMRC site that you are looking at except I believe that the tax code is regularly recalculated but most of these recalculations are not issued.
Why did you pay £9.80 tax on £2472.07 ?
As far as each of your employers were concerned they acted correctly in assuming at the time they were the only ones paying you. So as far as your old employer was concerned they were paying you £2472.07 and that was your total earnings for that month.
If you were normally earning under the level at which 40 % tax is deducted you would have paid about £292.00 in tax but you were paying tax at 40% so for that month you did not use your full 20% tax allowance. Normally you would pay tax at 40% on your earnings over £3862.00 so you had £3862 less £ 2472 which is £1390 unused 20% tax band for the month. This £1390 was then used to change £1390 on which you had paid 40% tax into £1390 at which you pay only 20% In other words you get back 20% of £1390 which is £278
Deduct the £278 from the "normal" £292.00 tax and it leaves you owing £14.00 tax.
I assume the difference between £14 and £9.80 is due to not having pension details and me using rough figures but hopefully you see what has happened.
Regarding next year
The general rule is that salary goes up net pay goes up. The increase in your wages will result in 40% tax and 2% national insurance being deducted. If it applies student loan will remain at the same rate so if you were paying 9% on earnings above the allowance, you continue to pay 9%
If you were to go somewhere with a different company pension this could change things, say you went from a company with no pension to one where you paid 10% of your earnings into the pension and they paid 5% more than your old employer then your net pay would go down, but you then have the benefit of the pension.
I am afraid you are going to have to take the hit of the extra tax.
You have been a bit unlucky there are two problems that occasionally affect people when they change jobs. One is getting a late payment from their old employer and the other is having a change of payday that results in getting 13 months pay in one tax year. Not all that many people have one of these problems far fewer get both of them.
Just bad luck I am afraid but provided HMRC get their sums right and you end the tax year paying the correct tax it will all reset for next tax year so nothing to worry about; probably.0 -
I think the September reference is alluding to when HMRC will have made their annual review of your tax position for the previous tax year.
The next thing to happen from now is that you should get a new tax code in the new year (Jan/Feb time) setting out what code HMRC think will be applicable for your employer to use from 6 April 2019.
The most obvious change will be that the underpayment adjustment will no longer be needed (or at least not such a large one).
This new tax code will be used from April payday onwards (6 April or later).
Later in the summer/early autumn HMRC will have received your final salary details from each employer you had in 2018:19 along with P11D from your employer(s) (if this applies to you) and details of any interest from the banks. Once all this information is available they will compare the tax you have paid with the tax that is due for 2018:19 and let you know if there is any shortfall (or overpayment due back to you).
If you owe additional tax for 2018:19, over and above whatever is deducted during the year, then HMRC will normally adjust your tax code to collect this. The normal timescale for this means that during the 2019:20 tax year they will check your tax for 2018:19 with any shortfall being collected through an adjustment to your 2020:21 tax code. If you end up paying too much then it is refunded direct to you.0 -
Dazed_and_confused wrote: »I think the September reference is alluding to when HMRC will have made their annual review of your tax position for the previous tax year.
Yes that is exactly what I was refering to. Sorry I have been awol & didn't explain properly in my post.0 -
What you need to do is make sure that HMRC have the correct estimated pay for your current employment. You can adjust this via the online personal tax account(PTA).
You can also ask that part or all of the underpaid tax in the current year is deferred until the next tax year if this is causing financial hardships.
The code you see each time you log into the PTA is not necessarily the actual code being operated. Effectively each time you log in the system recalculates based on the information it knows, i.e what you have been paid to this point in the year, what tax you've paid, and what it expects you to earn before the year end based on the estimated pay held on the system.
If any tax is owed it then works out the number of days/payment periods left in the tax year and calculates what restriction is needed in the code to collect back the underpaid tax.
Unless you accept the code or make adjustments then the code won't be issued.
If you are not confident doing this online then phone HMRC and speak to an adviser.[SIZE=-1]To equate judgement and wisdom with occupation is at best . . . insulting.
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It's causing me a lot of stress and confusion. I've received another letter from HMRC with yet another new tax code, 290LX, but the letter is dated 24 September even though I received it yesterday. Online the code is different. It is impossible for me to track and budget any of this and it is causing me hardship as my partner is financially having to take the strain to meet our needs.
I have a (very small) savings pot, not really savings as there is just under £1400 in the account. My partner can give me the additional few hundred pounds needed to make up this underpayment if necessary. I am thinking of calling HMRC to pay them this towards my tax bill and request that they issue me a tax code to stabilise my net earnings. Is this something HMRC will accept?0 -
It's causing me a lot of stress and confusion. I've received another letter from HMRC with yet another new tax code, 290LX, but the letter is dated 24 September even though I received it yesterday. Online the code is different. It is impossible for me to track and budget any of this and it is causing me hardship as my partner is financially having to take the strain to meet our needs.
I have a (very small) savings pot, not really savings as there is just under £1400 in the account. My partner can give me the additional few hundred pounds needed to make up this underpayment if necessary. I am thinking of calling HMRC to pay them this towards my tax bill and request that they issue me a tax code to stabilise my net earnings. Is this something HMRC will accept?
Your code last month was 317L and now this month appears to be 290L Do you realise that this will result in an increase to your tax of only about £9 I think that with a little thought you can find some cut-back in you outgoings for next month to allow for this.0 -
Your code last month was 317L and now this month appears to be 290L Do you realise that this will result in an increase to your tax of only about £9 I think that with a little thought you can find some cut-back in you outgoings for next month to allow for this.
For a month, yes. But going forward for six more months, I'd be bringing home net £300 less than my old job each month even though my salary has increased. I had expected a net increase in monthly income of £200(ish) when I changed job and had budgeted for this accordingly. So in actual fact I am £500(ish) worse off every month than I was expecting and have other financial commitments in place to suit that expectation which have now become unaffordable.0
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