To think this epitomises the squeezed middle - HMRC shitiness

[lurchersforever]

So the weekend before Christmas I have received the joyous news that I have not paid enough tax this year so my personal allowance for the rest of the tax year will be adjusted so I can pay it. This will wipe out the pay rise I have just received (it was the teachers' 5.5% and the first 3 months were pretty much wiped out anyway as they were received in a lump sum in November so taxed more, so that what I received for 3 months was the same as I what I got for one month this month). Next month I'l get nothing as a result of the unpaid tax. I am due another pay rise next month as will start a promoted role so I'll see what that brings but it won't be much as not a huge step up this time.

Next month my mortgage will go up £100 as I've had to renew for the first time since the rates rose (it could be worse) and I also have to pay back pretty much all my child benefit from last year which, as a single parent with an ex who pays nothing (I am with CMS - he's low income but owns a house outright and has money for stuff he wants) stings a lot.

I did exam marking in November, which nearly killed me in terms of workload, and got £630, which is £100 less than the tax I owe so is essentially wiped out by that.

I'm so fed up. I earn a salary that I never thought I would and would have thought if I did it would be great, but disposable income isn't that different from what it was pre-Covid as a result of col etc, but, worse than that, every time I do get a bit extra it's taken away. Enormous increases in workload and stress for next to nothing in the end. What is actually the point in working yourself into the ground for it just to be taken?

I understand completely how you feel. The salary I now earn as a teacher would have been pretty decent money 6-7 years ago, but now gets swallowed up so quickly by bills and leaves little for fun. However, the way I see it is that in today's climate, standing still financially instead of sliding backwards is an achievement. Would you consider doing some tutoring instead of exam marking? Much better paid and much less stressful.

Sympathies. I was on the wrong tax code for months due to a clerical error, that HMRC insisted could not be corrected without a letter, that got lost in the post. They are now clawing back what’s owed at a really unreasonably high rate. I can just about cope but it would put a family on a very tight budget into debt probably.

This might sound a bit basic but IMO part of the problem is the inflation on what are already massive monthly outgoings.

Mortgages being the obvious one.

My childcare bill is increasing £270 a month as of Hanaury. That’s an extra ~£6,000 we need to earn in 2025 just to pay for that.

Once you’re on decent wages / if you have a student loan, you’re paying 40%+ tax on any extra increases in salary, which makes it quite challenging IMO to maintain standard of living, as you need to earn so much more to cover the costs!

Are you saying that the all additional money you've received (backdated payrise lump sum/promotion payrise/money from marking) has either put you in a higher tax bracket or you have reached the earnings threshold where you lose your tax free pay?

Surely you would have expected this? You will still have more money than if you hadn't had these payrises.

im not sure this is HMRC’s shittiness who are just ensuring you’re paying tax accurately. The tax rates themselves aren’t set by them. Do you do self assessment? If so, I’ve asked them previously to reset my tax code and I will pay it via self assessment (it also gives a bit more time to put it aside). I think there’s a threshold though above which they can’t do it.

also it’s worth checking what they think your annual salary is via the Gateway as depending when you got your backdated pay they may use that months pay as representative of every month.

I have known teachers in your situation this year make a call to the HMRC to ask for more details and to find out they did not owe quite as much as they were being asked for. It's worth trying (set aside an hour for it though!)

You're not wrong.

Support staff in our school was offered the option to take their payrise over 3 paycheques so as not to screw up any additional benefits they are receiving. Should have offered teachers the same option.

Sign up for a government gateway account.
Log in each year and report any benefits in kind, and check that your forecast income matches what you anticipate you’ll receive. If you know you’ll do extra marking, reflect that into your forecast income. This will maximise the chances of your tax being accurate.
Ultimately, tax is tax. You have to pay what you owe, and you remain responsible for paying the correct amount.

This can all be done online.

HMRC have done nothing wrong. You have had extra income so you owe more tax.

If a mistake has been made, and your employers haven't given the correct information? That's good if you can check online but the option to phone exists so it's fine if people prefer to use it.

OP, someone’s got to pay for the enormous welfare bill and the millions not in work. And the bumper pay rises to train drivers and other union interests. And the rampant government corruption which has been going on for year but is unfathomable bad since the last 4 years.

It sounds like the exam marking pay might have pushed you into higher salary bracket. I can't see how you have underpaid otherwise as surely you have a fixed salary & employer sorts out tax code & NI contributions etc.

No help now but it's probably not worth doing the exam marking. It’s depressing for you.

You can ask HMRC to park the additional tax you owe, they will put you on an emergency tax code and will just work out your tax on a month by month basis for the remainder of the tax year. You will then need to do a tax return to arrange to make the shortfall payment.

I’m probably not explaining it well but it can be done, we’ve done it before because of a bonus. It gives you a while to save the shortfall at least.

This is my point though - no point in doing the extra exam marking! So things I can do that seem to improve my income are literally not worth doing! What's the point in that? Unless I can double my salary (never going to happen) there's no point in having further pay rises/doing exam marking as the majority of what I get will be taken. How is that fair?

There have always been tax cliff edges which put you in a higher tax band, and/or result in the loss of some benefits or partially or fully remove your personal tax allowance. Some people avoid this by making additional pension contributions.

It sounds as though they have taken the additional tax owed in one lump sum. When I owed additional tax, I was able to either pay the full amount immediately or pay it off monthly through my tax code.

No it won't be a lump sum - they'll be taking it monthly between January and April, which means that, as my pay rise wasn't huge anyway, it will take it all for those months. I get the point about cliff edges etc but I've been on the higher rate for a couple of years now and nowhere the 45%. I can't see the point in a situation where the whole pay rise is taken. It's a massive leap from 20% to 40% once you hit £50k, but then a tiny 5% once you're on a seriously high income. It doesn't make sense to me.

My teacher husband did exam marking once many years ago. Took hours on the phone to HMRC to get them to understand it was a one off and they shouldn't take his one month higher pay and assume he's going to earn that every month for the next tax year.

It's only going to get worse

But honestly this does illustrate why high taxes are bad for the economy. If the government is going to take most of it (and this really is the case if you hover around 50k or 100k and have kids) there is literally no point in taking on anything extra. You had might as well relax instead.

And we are short of suitable examiners too....

Who is paying 5%?
Nobody on PAYE, that’s for sure.

If you only earned 600 odd from exam marking AND this was self employed income rather than PAYE, and it was your only source of SE income, you don’t have to pay tax or NI on it: you get £1,000 allowance each year. Obviously check with HMRC but that’s always been my understanding.

Well you’re ignoring the effect of reducing NICs above the upper earnings limit. You’re also ignoring the effective 60% tax band over £100k.

Your biggest problem is the ex that work contribute. If he doesn’t have much income you’re wasting your time with the CMS. Does he see them?

Check with HMRC...they are a complete shambles. I am being chased for a partnership return for 22/23 as is my wife (and business partner) they have not responded to anything I have sent. Suddenly last month I am being chased for a partnership return for 21/22 but not my wife.
For 21/22 last year they appointed debt collectors and then called them off.

My accountant...yes I use an accountant so these things don't happen can't get a response from them..but tells me that they didn't request partnership returns for those years as ours is a micro business which we are slowly winding down.

In regards to 21/22 he submitted all of his tax returns in time, only for over 40 clients to be chased by the hmrc!

Currently they are asking for over £2k in fines from us for something we didn't need to do