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Post Info TOPIC: Are both me and HMRC going mad? Tax deduction differs.
Sue T


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Are both me and HMRC going mad? Tax deduction differs.
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My client earnt £45570.53 for tax yr 09/10.  They had a P45 up to mth 10 showing the following Total pay to Date £39403.85 and Total tax to date £7398.26. Tax code 638L
I did the payroll for mth 11 - Gross wage 3083.34 tax deducted £397.07 and same for mth 12 (Done on 12Pay system) tax code 638L.  I phone hmrc to check these figures as when I put in £3083.34 for mth 1 tax yr 10/11, tax code 647L ( it is coming up tax to be paid £508.60 (HMRC tax calculator) about £111 difference a month despite tax code going up. HMRC say they don't know why there is a difference does anyone else know - I must have missed something? Payroll is not my strongest topic and I rely on 12Pay or HMRC calculator. HMRC say P45 figures are correct.
Any light throw on this greatfully received.

Sue

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Crosby


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Sue,

up to Month 10 your client will have been earning at the equivalent of over £47,000 a year which would mean that he will have had higher rate tax deducted. His (or her) current salary is £37,000 which is well within the basic rate band.

For Months 11 and 12 he has received the benefit of the "spare" basic rate band that has not been used against his current salary and, in effect, received a repayment of the higher rate tax paid in the earlier part of the year.

I'm not sure I've explained that particularly well but I hope it makes some sort of sense.

David

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Sue T


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Thank you so much David it is much clearer now - I knew that she had probably paid too much in her previous job but couldn't work out the how, and HMRC just said her P45 was correct so I was stumped as to why there was a plummet in the tax for 11 & 12. You have explained it well, so thank you very much, I will now enjoy my weekend.

Sue

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RobH


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Beautiful pooch, she's not a pure bred greyhound is she?

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Rob
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Davey


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As David Cosby said the Higher rate tax comes into effect .

The Gross wages in total are £ 45570.53 less the personal allowance of 6385
leaving taxable pay of
39185.53

0-37400 * 20 % 7480

1785 * 40 % 714


total tax 8194 due to Hmrc using code 638L


Your figures show for total tax of 397.07 * 2 = 794.14
7398.26


8192.40

a difference of 1.60

using 647L Tax code

Gross Wage 45570.53 less Personal Allowance of 6475


0-37400 * 20% 7480

1695.53 * 40 % 678.21


8158.21 Tax Due








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David
Sue T


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Rob - he is not my dog he was a rescue - he is lovely and has now got a new home.

I have a whippet and a border collie x greyhound.

Thanks Davey for the calcs.

Sue

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