Tax code change for 2024-25

[MamaInManolos]

Hoping to gain some insight on the exciting topic of tax codes..! TIA.

My 2021-22, 2022-23, 2023-24 tax code was the standard 1257L. I've just been informed by my employer that my new tax code for 2024-25 will be 1241L which means I'll effectively be paying more tax overall. (I'm also getting a 6% pay rise which will take effect from this April 2024 payroll at the end of the month (if this affects going forward for next year's tax code, I don't know?))
Does anyone know why my tax code has changed and the tax free allowance amount has been lowered by £160? I've read that only HMRC can tell you why they have lowered your allowance, in this case from £12,570 to £12,410. Is it due to my employer informing them of anything, as they told me it the tax code had changed but didn't seem to know why. I know it's an employee's responsibility to ensure they have the right tax code hence this long post!

The only other thing I can think of was from last January 2023 (2nd week onwards) to January 2024, I was on Maternity Leave on 90% pay for first 6 weeks, then SMP for 39 weeks, then on zero income for remaining 13 weeks, this whole time for all of 2023 I wasn't deducted tax or NI as earnings were much lower than usual or zero towards the end.

In January 2024 I received part of my 2023 accrued holiday pay as I tagged on my holiday allowance to the end of the 52 weeks maternity leave to maximise a longer time off. In February 2024 I received the remainder of my 2023 accrued holiday pay calculated to the date in February where the holiday allowance was used up and completed, and from that point on.. 19th February I returned to work, so my February payslip was a mix of holiday pay and half a month's salary etc.. Now since January 2024 to my most recent paycheck in March 2024, my income has been substantially higher than it was in 2023 but still with zero Tax deduction, but paying NI and Pension contributions again.
Do you think HMRC are trying to claim these 3 months of 2024 with no tax deducted by lowering my tax code to 1241L so I effectively pay more tax over the new tax year 2024-25 so it balances out?

I've also read that income tax will be calculated for past 2023-24 tax year, over the coming months usually between June and October (2024) and will receive a letter if you've over or underpaid tax in this period.

Do I wait until then, or call HMRC about the tax code/tax amount and ask once I receive my April 2024 payslip? It will be the first one with the new tax code.

If you've reached the bottom of this post, thank you so much and I appreciate any advice or insight :)

Morning,

HMRC should have posted you out your PAYE code for 24/25 in February or March. If you still have that, it should hopefully explain the reduction from the usual basic rate. You can also register with HMRC online to view your tax code. If I had to guess, I would say it is bank interest or a taxable benefit being applied to the code.

Having said that, the impact of this deduction is less that £3 per month (£160 by 20%/12 months) of additional tax being collected. (Assuming you are a basic rate tax payer.) Which would come out in the wash next year to reflect your actual tax liabilities. Does that impact how much headspace you want to give this?

I don’t think your maternity pay movement would have much impact of this, but I may be wrong!

For any prior year over or underpayments, your P60 should give you a good steer, if you have no other income, such as interest, dividends, rental income, etc. if you put the figures on here, someone could do a quick sense check.

Another thing to consider for this year, does your pay rise being you into being a higher rate tax payer?

Do you have the PAYE letter? It tells you on there the reason for the change. If you dont have it log onto your government gateway account and I'm pretty sure you can get a copy of the letter from there.

Thanks both..
I've not received any notification or PAYE letter from HMRC this year. I do have the HMRC app and there's no messages or tax letters on there, the inbox shows as empty. Hmmm....

Here is my inbox on the PAYE section on the HMRC app.. No messages or tax letters.. I think I will contact them.

In the app, go to the PAYE section and hen scroll down to "Understanding your tax code ".

That then takes you to the changes and reasons.

Mine has changed a bit as a result of a child benefit payment paid outside the year to which it related. It's a pain!

There will be an explanation online. Mine changed recently when I took on my work car as it's taxed as a benefit in kind but I can see this online.

It could be some sort of benefit such as private medical insurance that your employer pays for

Yes, your tax code will have the explanation. If it has been sent to your employer it should be available to you v soon!

My employer does not provide nor pay for private medical insurance.

Yes my employer has been sent the letter with my new tax code to use for 2024-25. Hopefully I'll receive the letter soon too.