Higher rate tax band - things to be aware of?

[Draeger]

Just had an email from HM Revenue & Customs informing me my PAYE tax records have changed. Having logged into my account there, it states I will be required to pay over £3000 more tax in the coming tax year. I have no idea why, this seems a rather large increase to me? My wages have not increased substantially in the past year and there isn't anything within the account to give me a clue as to the reasoning behind this.

Time to book an appointment with someone in the financial advice sector I think.

 

[Bill Turnip]

Was your total gross income higher in the year previous? If for example you had dividends in the prior year, HMRC can assume you have similar income in the following year, and adjust your PAYE coding to allow for this, I believe.

In theory, this should make your tax correct at the year end, but PAYE is not good at dealing with anything that isn't simple salary. And even that doesn't work when salaries get above £100k.

 

[dlockers]

Just had an email from HM Revenue & Customs informing me my PAYE tax records have changed. Having logged into my account there, it states I will be required to pay over £3000 more tax in the coming tax year. I have no idea why, this seems a rather large increase to me? My wages have not increased substantially in the past year and there isn't anything within the account to give me a clue as to the reasoning behind this.

Time to book an appointment with someone in the financial advice sector I think.

Just ring HMRC and they'll tell you. No financial advisor can do what you can.

 

[CapitalOne]

Just had an email from HM Revenue & Customs informing me my PAYE tax records have changed. Having logged into my account there, it states I will be required to pay over £3000 more tax in the coming tax year. I have no idea why, this seems a rather large increase to me? My wages have not increased substantially in the past year and there isn't anything within the account to give me a clue as to the reasoning behind this.

Time to book an appointment with someone in the financial advice sector I think.

I had this last year (although it was more like £3.15) as it turned out there was some kind of system migration in 2021 (IIRC) which caused the recalcs. Would be interested to hear if yours is the same thing, and if indeed it is a "thing" which seems to have bypassed every public radar. But yes, HMRC will tell you over a live talk session if you can't be bothered to wait 5 hours on the phone

 

[Draeger]

Just ring HMRC and they'll tell you. No financial advisor can do what you can.

Will do so. It would make things a lot simpler for HMRC if they just explained briefly within your online account why you were subject to an increase, would also reduce the number of telephone queries they need to field I would imagine too!!

 

[dlockers]

Will do so. It would make things a lot simpler for HMRC if they just explained briefly within your online account why you were subject to an increase, would also reduce the number of telephone queries they need to field I would imagine too!!

Totally agree. Mine says I owe £8k more tax next year but actually when you read it - what they mean is my tax free allowance will reduce my £8k (therefore approx 3.5k tax extra to pay). So even when it is on the website, it is poorly worded!

 

[EvilRob]

Will do so. It would make things a lot simpler for HMRC if they just explained briefly within your online account why you were subject to an increase, would also reduce the number of telephone queries they need to field I would imagine too!!

If you go to your online account, PAYE section and choose "Check next tax year" it will tell you what your tax free amount and personal allowance are and how it has been calculated (Additions, deductions). It will also show the expected income they have used from your employment.

Have you checked that and if so what's missing there for you to understand why your tax has increased?

 

[Hades]

I wasn't aware of this until the other week when it was mentioned on this forum on another post, I just hit 100k exactly, so from next year they get me. Must abit it's a sneaky move but (yes yes) first world problems n' all.

Once over 100k put any bonus directly into your pension or make AVC's into your pension. Assuming you are below the annual pension contributions limit then it avoids tax and tax you back below the 100k threshold (until earnings increase again).

 

[Ali195]

No children

Once over 100k put any bonus directly into your pension or make AVC's into your pension. Assuming you are below the annual pension contributions limit then it avoids tax and tax you back below the 100k threshold (until earnings increase again).

Ah, thanks. Each year our company mentions this on the bonus/annual review en mass email. To be fair from Feb next year I need to get myself clued up on this stuff more because I'm ripe a rinsing.

 

[delta0]

I sit between the 50 to 60k and wife still claims child benefit. I just pay half it back in the following years tax. Once I hit ove r60k she's stopping it.

Even if you are above the threshold you should claim it at £0. It will ensure you receive state pension contributions if one person is not working such as during maternity leave etc.