Do you understand how PAYE works?

Why do you think tax codes don't work for paye - my understanding is they are updated to correct for a change in income and the salary is adjusted the following month. Which bit doesn't work?

My husband is an additional rate taxpayer and gets annoyed that his company tax his bonus 'wrong' and he has more to pay in his tax return every year.
It's literally how losing your personal allowance works, unfortunately, and tax codes don't work. It's called a nice problem to have.

Thing is that even those who make their money from, say, IT, seem numerically challenged sometimes. I've had loads of IT contractor clients earning £500-£1000 per day, who've been completely bamboozled by misunderstanding something as simple as VAT on an invoice. They can't "get" that 20% of the net amount isn't the same as 20% of the gross amount. A VERY common scenario is them trying to claim 20% on the gross amount paid for say, a mobile phone contract, and their eyes glaze over when you try to explain that 20% VAT included in the gross £120 isn't £24, but instead is £20, i.e. £100 plus £20 gives £120. Something so simple, yet seems beyond even high earning IT consultants whose entire job is underpinned by Maths!

YANBU however I would say if you are constantly answering the same questions then how about doing a FAQ, cheat sheet type online document. That way you can direct people there first. Maybe have it put on the bonus letters a link to this. An online tutorial? Going through a payslip. You may think you shouldn't NEED to but it seems from your post the need is rightfully or wrongfully there. So make life easier for yourself. We all struggle with different things at work. If the same problem comes up again and again then clearly people do need support.

Similar to how seemingly a majority of graduates don't understand how student loans work, despite being intelligent/educated enough to have a degree! Like virtually anything else, a quick Google search would tell them all there is to know about how they work, yet they don't seem to have a clue.

Sounds like the type of teachers we need today! I remember having a couple of "old school" teachers like that back in the 80s and the gave all kinds of knowledge beyond the text books/syllabus (and still found the time to teach the syllabus!). They were the kind of teachers who would "fill in" with extra information (based on their real life) on lessons such as last day of term etc where other teachers would just put on a video or give you a "fun" worksheet to fill the time.

This is the key thing. It 's your job to explain this stuff if asked.

I guarantee the person asking you the question also gets asked questions which seem easy to them.

The other thing people dont seem to understand is compound interest on their mortgage. They seem to think if they borrow £100k at 6% they'll pay back £106k 🙄. Not how it works!

My 13yr old have covered all of this at school though, they do teach it, maybe some of us conveniently forget or didn't pay attention in the first place.

People who earn over £100k a year are not universally knowledgeable, they often apply their brain cells selectively - I get daft questions from them all the time - it's fine I expect it - but I won't tolerate being blamed for taking their money - that shit gets nipped in the bud very quickly.

Well yes, I would know if my employer wasn't paying the correct amount to my pension because my payslip.tells.me what my and their contributions are each month. I know from my employment contract what percentage each of these should be so it is very easy to see uf the amount is incorrect.

Yes because then I don't have to have tantrums or cry discrimination because I don't get what I want

My maths master at school used to teach us how to calculate tax and NI. He used to say he didn't care if we got our O-Level or not (this was a long time back) but we would know how to check our payslips!

Even within payroll staff now though. In the old days you had tax tables and cards to fill in for everyone. Now you enter the figures into payroll software (we have no choice when RTI was introduced we had to stop using manual wage cards) and the deductions are all calculated for you. So many don't learn the process behind it.

When you pay a bonus to an employee, their tax code gets updated very promptly to take the boinus into account and we are required to put the new tax code into our payroll in a timely fashion - there is no need to reclaim tax. Some months we have people who didn't do any work being paid overpaid tax only. Our payroll software isn't the most sophisticated system available but it still makes adjustments so none of our team need to reclaim tax from HMRC.

Yes, plus how compound interest works. That is why DH and I put so much in our pensions.

I do payroll - I am astounded by what people think I am empowered with. And the understanding is not proportionate to earning - one woman had to be spoken to very firmly about the attitude she was giving me and she was on £1000/day - so definitely not expecting high earner to have the first clue either. You are paying the tax the Governrment/HMRC has decided what you are paying - I do not decide and if you think it's too much, you'll need to speak to HMRC to get your tax code change.

I do not take your tax - the GOV take your tax.

@rainbowunicorn

I just wonder why in this day and age where literally most people have access to the Internet 24/7 it doesn't occur to them to use it for anything other than social media, shopping and ordering a takeaway.

Nail on the head there!

@senua

I know that many don't like Maths and say "what's the point in Pythagoras?" but even why you try to apply Maths (e.g. explain PAYE) they are still not interested.

I think that's more a case of them losing the will to live with Maths at an earlier age, so they start to believe the old mantra of "I can't do Maths, me!" as some kind of demented badge of honour.

Looking at my son's secondary school Maths, re loans etc., there was also far too much emphasis on the "Maths" side of it, i.e. turning a loan into a pretty hard equation, for compound interest, rather than actually emphasising the real life side of it. It was just divorced from real life reality as it was all couched in mathematical terminology rather than actually emphasising, in simple terms, the practical effect of over-paying a loan or saving small amounts for many years. If someone is a bit unsure of equations, they're not going to be receptive to learning about compound interest if it's all based on an equation rather than real life.

Same with pythagoras, Trig, etc. It's seldom taught in a "real life" understandable and practical way that a pupil can relate to. Maybe at the earliest of stages, there is an element of that, but the teaching soon accelerates and turns into abstract concepts that a teenager will struggle to be able to see applying to their real life.

Yes but this goes back to taking a bit of personal responsibility. A quick Google will give you a tax calculator that will do that for you. The money saving expert one is what I tend to use. They have calculators for everything finance.
I just wonder why in this day and age where literally most people have access to the Internet 24/7 it doesn't occur to them to use it for anything other than social media, shopping and ordering a takeaway.

@MikeRafone

Why do so many people expect to be spoon feed at school? Should we be teaching independent research and how to find an answer to a query at school using basic materials and sources? Should we be teaching critical thinking and curiosity?

Problem is that schools/teaching really hasn't changed in best part of 50 years. It's still far too much about memory and far too little about research and thinking on your feet. 50 years ago, people needed to remember things and needed a "bank" of knowledge, as resources were more scarce and there were far fewer "crutches". With the advent of computer power and the internet, there really isn't a need for most people to remember so much stuff, whether it's facts or a strict procedure for working something out. There is software, apps, etc for literally everything as well as Google etc. We need to be teaching people how to find answers to problems, we need to teach critical thinking/logic etc so that people can work out for themselves what are reliable sources, what aren't, so they can choose the right software/app for their problem, etc.

I'm a Payroll Manager so i feel your pain!!

Every April my team put a tally up of calls they take that say "i haven't been paid £12,000 this tax year yet so why am i paying tax??"
Blows my mind.

Yes! A very common misunderstanding, even though a quick google search would put them straight. Seems some people would rather believe "pub talk" from strangers or just half reading a media headline and misunderstanding it is more reliable than actually researching it for themselves.

Best is when someone on, say, Facebook, is advised to Google and they say they don't have the internet! They clearly don't realise that you need the internet for Facebook. Doh!!

Yes. But I am an accountant, so I really should ☺️

I was talking about the people I used to work with (I was a teacher) who said they'd rather not have the £1500 quid (or similarly quite low) pay rise as it took them just above the 40% threshold - and they genuinely believed it meant they'd have to pay 40% on their whole taxable pay.