To ask what on earth is going on with my tax?

Stickworm · 2023-07-02T13:57:17+00:00

In April I got a bonus and pay rise. This month I have paid a lot more tax than usual and because of this I have actually earned £400 LESS (after tax!) than previous months. Can anyone explain this? I’m absolutely baffled 😅 of course I will attempt to speak to HMRC if I can ever get through but wondered if there is an obvious reason that I’m missing.

honeyandfizz · 02/07/2023 14:59

Has the pay rise pushed your pension contributions up? This happened to me last year where I was left worse off after a pay rise - gutted!

Wolfpa · 02/07/2023 15:00

Have you been placed on an emergency tax code?

GoodChat · 02/07/2023 15:02

Does your payslip say anything different to normal other than figures?

I would assume you underpaid previously so they've taken it back this month.

Original poster

Stickworm · 02/07/2023 15:06

I’ve just had a look and yes it looks like I’ve been moved to a K tax code which seems to suggest I owe more tax but I actually got a tax rebate for the previous tax year so am utterly baffled! Will definitely speak to HMRC! Streeeesssss

OP posts:

Saywhatevernow · 02/07/2023 15:08

All depends on the bonus and pay rise. If it was significant it could’ve put you over thresholds for the year as a projection.

Original poster

Stickworm · 02/07/2023 15:10

I wouldn’t say it was anything above a normal bonus or payrise expectation and I’ve never experienced this before 🤔 but I’m wondering if they have assumed my new salary is based on what I earned the month of my bonus.

OP posts:

Untrusting · 02/07/2023 15:23

Yeah K codes are sadly never good.
It means your deductions outweigh your allowances.
It's around this time of your that your employer issues out your P11D's.
Do you have a lot of employee expenses such as company car etc or have you changed that since last year/fuel card/other expenses?

The bonus in April would have normally settled itself out by now in the fact that May might have been a high tax month but June should have been more back to normal.

Did you get it paid in April? It's the worst month to be paid a bonus to be honest as yes the system calculates that you earn that amount for the remaining months of the tax year and in Aprils case that's the whole 12.

Ex hmrc employee - feel free to ask anything else.

Original poster

Stickworm · 02/07/2023 15:37

Thanks so much @Untrusting ! No company allowances at all! The only other thing I can think of is I was self employed for around 6 months last year (went from employed to self employed back to employed again all with the same employer - complicated story!) so maybe they’re deducting my self assessment tax from my PAYE?!

OP posts:

EsmeSusanOgg · 02/07/2023 15:37

Stickworm · 02/07/2023 15:06

I’ve just had a look and yes it looks like I’ve been moved to a K tax code which seems to suggest I owe more tax but I actually got a tax rebate for the previous tax year so am utterly baffled! Will definitely speak to HMRC! Streeeesssss

Have you got a personal tax account/ the HMRC app? You can flag the tax code is wrong there. Though it is highly likely your work payroll has sent the wrong tax code info to HMRC - so worth talking to them on Monday!

EsmeSusanOgg · 02/07/2023 15:39

Untrusting · 02/07/2023 15:23

Yeah K codes are sadly never good.
It means your deductions outweigh your allowances.
It's around this time of your that your employer issues out your P11D's.
Do you have a lot of employee expenses such as company car etc or have you changed that since last year/fuel card/other expenses?

The bonus in April would have normally settled itself out by now in the fact that May might have been a high tax month but June should have been more back to normal.

Did you get it paid in April? It's the worst month to be paid a bonus to be honest as yes the system calculates that you earn that amount for the remaining months of the tax year and in Aprils case that's the whole 12.

Ex hmrc employee - feel free to ask anything else.

Also to note, P11Ds now need to be sent electronically by the employer - since the start of this tax year. It could be that OP's payroll has tried to file on paper and it has not been processed.

Untrusting · 02/07/2023 15:50

@Stickworm that sounds like it will have had something to do with it.
Did you file a tax return or not yet?

Definitely download the PAYE app if you can that @EsmeSusanOgg mentioned.
Gives you more clarity on what's going on with your taxes and then at least you have something to work off when you ring HMRC.

mrsbyers · 02/07/2023 15:55

Go onto the hmrc app what’s probably happened is they have assumed your months pay is a new rate and bumped up your annual salary expectant accordingly - I was paid in error four months pay in April and my expected salary was almost £200k when I checked the app !

Original poster

Stickworm · 02/07/2023 16:06

The weird thing is, the tax code on my payslip doesn’t match that on my HMRC PAYE account (which is a standard one) 🤔

OP posts:

Original poster

Stickworm · 02/07/2023 16:08

Yes after my bonus was paid HMRC calculated my new annual salary as over £100k which is absolutely definitely is not 🤣 I correct it but maybe it just hadn’t been corrected in time for this months salary?

OP posts:

hettiethehare · 02/07/2023 16:23

Have you got any letters from HMRC about the tax code change? Sounds like what might have happened is that for the month you got the bonus the PAYE system assumed you would earn over 100k for the rest of the tax year, so issued you a K code to claw back the personal allowance. That got sent to your employer, but because these things lag a little, this has only just been actioned in this pay month, but HMRC have gone back to your normal tax code but this has not fed through to your employer yet.

This happened to DH and despite HMRC claiming that tax code changes take effect in a few days, each change took 3-4 months to feed through to his employer.

Original poster

Stickworm · 03/07/2023 22:03

Thanks for all your tips. They did indeed incorrectly assume my new salary was over the threshold based on the month I got my bonus. It had been corrected on their system on the 1st of June but not fed down to my employer 🙄 took me an hour on hold to find that out. Good old HMRC! Anyway, all sorted now. Thanks again!

OP posts:

Charlie2121 · 19/11/2023 10:47

If you log on to your government gateway account you can input your estimated annual earnings which will ensure the situation you experienced is not repeated.