Tax Codes

[Vern1961]

Not sure why I owe £300 tax to be honest considering my wage has only changed by £600 a year switching jobs, and also unsure how I take a £3450 drop unless they've done it to collect the money from the last 4 months but then £3450/12*4*0.2 = £230.

As above, looks like your previous employer has done some averaging of your deductions which then leads to arrears on starting your new job, or in my case occupational pension.

What's also annoying is they don't give you an option to pay the tax owed as a one off payment which I could have done quite comfortably out of my lump sum and left the code unchanged.

 

[Mr^B]

You tax code has nothing to do with Payroll, they get sent the code by HMRC.

You should contact HMRC and/or sign up for the online gateway, from there you can view all your tax codes and the calculations behind them like this:

You can use the links at the bottom to try and correct it via the gateway, or phone them up and query the numbers with them directly.

 

[Fusion]

You should contact HMRC and/or sign up for the online gateway

Aha! Didn't know about the online gateway, have signed up for it. HMRC seem to think I underpaid in the previous year (doesn't look like I did, going by the figures). Have something to work to now though. Thanks!

 

[SpeedFreak]

7k child benefit

 

[Mr^B]

7k child benefit

That's not how it works - that's the deduction from the tax code, so you need to factor in the income tax rate which is paid on that. In this case it's taxed at 45%, so I owe £3213, which is for 4 kids.

 

[Basher]

That's not how it works - that's the deduction from the tax code, so you need to factor in the income tax rate which is paid on that. In this case it's taxed at 45%, so I owe £3213, which is for 4 kids.

I thought any meaningful child benefit stopped when you earned enough to get you in the additional rate bracket?

 

[Mr^B]

I thought any meaningful child benefit stopped when you earned enough to get you in the additional rate bracket?

It does, that's why I'm paying it back through my tax code.

 

[Basher]

It does, that's why I'm paying it back through my tax code.

Yeah I was just wondering what’s the point in claiming it if you have to pay it all back?

 

[Kemik]

Yeah I was just wondering what’s the point in claiming it if you have to pay it all back?

There are various reasons why one might do that, including that it counts towards state pension contributions.

 

[Mr^B]

There are various reasons why one might do that, including that it counts towards state pension contributions.

^ This, plus it goes into a savings account earning interest before I have to pay it back the following year.

 

[khrall]

There are various reasons why one might do that, including that it counts towards state pension contributions.

This is exactly the reason we do it in our household, my wife is a 99% stay at home mother to our children, this keeps her NI payments up for state pension.