Do you understand how PAYE works?

[Merryoldgoat]

Just that really.

I run payroll and get queries which, to me, seem pretty basic. However as I understand tax I can’t decide if I’m being unreasonable getting irritated.

eg. Someone (a higher rate tax payer) wondering why they have paid an additional £400 in tax after getting a £1000 bonus.

To me that seems completely obvious but maybe it’s not.

so:

YABU - I get paid via a payroll and don’t understand how PAYE tax works

YANBU - I get paid via a payroll and understand how tax works and would expect tax to increase with additional payments.

I can't really vote as I work in tax, so I can sit down and actually calculate someone's tax to the penny by hand.

Thing is, even before I started this career I knew from when I got my first job at 15 how PAYE worked. I always read up on MoneySavingExpert and knew the ins and outs of various financial things (how to get best deals, what credit cards are best and how to use credit efficiently, good debt v bad debt, budgeting etc). For me though, I guess it's because I found it interesting so I read up on it. Others wouldn't so have a lack of knowledge.

I do think there should be a lesson once a week for a term in sixth form for financial basics. If they still do Citizenship, they could easily slot it in there or make it its own compulsory topic.

I also work in payroll, our HR team run a monthly induction for any new joiners and we go along. Our presentation includes things like how employees access their payslips and enter their bank details into the system. But we also explain payroll cut-offs and do give some basic information on how tax works, student loan deductions etc. We have found it really helps reduce queries, especially when employees receive their first payslip from us.

I understand PAYE. Pretty thoroughly I would say because (a long time ago!) I used to calculate it manually. I can check that the computer has got it right.

If I think a bonus or starting mid-month or whatever is going to cause concern then I try to give warning beforehand. And I always explain that I can't put things right - only they can speak to HMRC about their tax affairs, not me.

Oh dear!

We have this wonderful new invention called Google! I just wish more people would actually use it, along with YouTube tutorials, etc., rather than expecting someone else to talk them through it, which I regard as very "needy".

Fair enough a couple of decades ago, or more, it was hard to find information and there was more of a need for "one to one" explanations of uncommon things, or a visit to the library to find answers in books.

But now, when nearly everyone manages to google for cute cat pictures or "slebs" news, then I think people need to take more responsibility for themselves and actually spend a few minutes to research these pretty basic "lifestyle" matters.

I understand it but know many people really don't. They also don't understand that PAYE or not the buck stops with the individual to ensure the correct tax is paid so if a tax code is wrong they could end up owing thousands and it's still the individuals responsibility.

I do the payroll at my company and ,yes I am surprised that so many people don't understand how to calculate their payroll
I've also had people accuse me of keeping thier emergency tax for myself.

I’m a higher rate tax payer and yep, every bonus, overtime or any extra payment I lose 40%. Yes its disappointing as I’m far from rich on a single 63k salary in the South East. I sleep on the sofa bed in living room when DS home from Uni, but the government thinks I’m well off enough to pay 40% tax. Maybe your colleague doesn’t get it, it’s 40% every time sadly. Only time I don’t is when I get bonus in the form of vouchers, tax free so I always choose them if I can

Was she told it'd be tax free?

@Merryoldgoat just wait til they realise things like private healthcare often come off their tax code...

Don't work in payroll (or anything to do with finance) but the old man was an accountant so might consider a career change at 35!

I understand it, but I have memories of a very boring student job selling ice creams on Brighton pier in winter, no customers but not allowed to shut up shop, no phones or books allowed. I amused myself by working out how much money I was earning every minute, both before and after tax, by hand using a pencil and a bit of till roll.

Helped that DM worked for what used to be the DSS, so had taught me all about tax, NI and pensions.

Wouldn’t it be nice if you got to keep 100% of bonus and overtime!

As a student we had to split the landline phone bill (before mobiles!) and because some people used it for hours every day, and others not at all. We (I) did it on a itemised basis.
Then I would apply the VAT.
My friend could not understand why we didn't just split the VAT 6 ways evenly or why as the person with the biggest bill by a long way, she also paid the most VAT

In the grand scheme of things, some might say that it's not fair that some people only get paid around £20k a year, and yet some people get that as a bonus (albeit heavily taxed).

Lots don’t understand tax, hence why you see people thinking if they earn 20k and take home 1.5k a month, someone who earns 80k is taking home 5.9k a month.

I've just offered someone a freelance short-term contract, on the grounds that its a part-time role which doesn't have to be done at specific times, we can only offer them a 3 month contract initially and they also have other business interests which they want to keep going. After they'd asked me on several occasions whether they got holiday pay or sick pay, and whether our payroll agency needed their details, I was seriously considering whether that was the right decision. They're a 60-something small business owner, with a varied career, so I can't believe they've not run into self-employment before.

Not by me or my team!

If you think Hmrc are bad on PAYE you should see them on CIS

Fuck no. Worked in construction in my first job and NEVER again. Back when you had those little certificates to complete by hand!!!

Oh god, the different cards and vouchers!!!!’ At least that is one process that is now simplified.

I think lots of people don't realise bonuses count as normal income and they affect all your deductions. I never did

Is it part of your job to answer these questions? Or are you being put upon?

I understand how PAYE works and how to check my tax code as frankly my work screw it up at least once every 6 months so check my payslips with a fine toothcomb!

Their best one was when they overpaid me I pointed it out made a lump sum payment to them (minus the tax and NI deduction) and they then said I had to pay the full amount including what was taken in tax back to them as well.....had some interesting emails to say the least til I asked them to show their workings as I sent mine through (which were right).

Yes I do, but I run a business and the payroll every month myself. I worked in payroll previously for years and I'd often get similar questions so clearly some people don't understand the ins and outs of it all. That's fine...I'd just explain. If you don't know, you don't know.

I understand how it works, but I'm salaried and usually I get paid the same amount every month.

Dp works shifts and they have all different shift allowances, hourly rates, unsocial hours payments, first aider payment, weekend time and a half, bank holiday double time etc. and it's almost impossible to decipher his payslip. We mostly manage to work it out in the end, but there are a lot of people he works with who don't understand their pay and wouldn't know if it was wrong.