If my tax code has gone up why is my take home pay less?

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Could someone more knowledgable explain this to me please. I know something happenned in April and I should have been paying more attention but I was busy.

So I am on the standard, nothing funny about me tax code. In March it was 603L. From April 647L. If my understanding is correct that mean my personal allowance of untaxed income has gone up from £6030 to £6470? Doesn't this mean I get taxed on less of my income? (sounds unlikely, I know). So how come my take home pay in April has gone down by £300 odd because my income tax has gone up by around £250 and nat ins by £30. Basic pay exactly the same.

Thanks

bump

has the 50% thing for super high earners come in yet?

do you earn over the super high threshold? (cant think of technical term )

when did you start in the job? did you salary increase alot at some point last year?

Been there for ages. No pay rise at all in january becasue of recession blah di blah. I thought the 50% thing was 100K plus and would it have come into effect already?

why have they charged me so much more income tax!! It is really buggig me now - I am £300 a month worse off which is budgeted for. What could it be? Who could I ask?

and no salary increase for ages - just the usual token inflation amount last january.

Were you unemployed before you started your job in January? If you weren't working for a good chunk of the year your tax would have been lower because you'd have more of your tax allowance to use in a shorter space of time IYSWIM? I'd give the inland revenue a call though - they were really helpful when I had some tax queries last year. If you don't know where to call your payroll department should be able to give you the right number.

no ive been working there continuously for 7 years apart form 2 mat leaves - but went back in august last year from last one. yes will give them a call - i know my office I think.

what else happenned in the budget for the new tax year? seems weird it happenned in april pay slip.

Sorry, no idea how I came to the conclusion you'd started in January!

In that case, can't really think of anything that would make such a massive difference to your pay.

NI up by about £30 is right.

You are right about your personal allowance, so it must be the rate you are paying. Are you earning enough to be paying higher rate (40%) tax this year? And because you were on ML last year did you earn less so that you were only paying basic rate?

The calculator here might help.

The reduction in personal allowance over £100k and 50% rate over £150k don't come in until April 2010.

as others said, it's the ML. You may have been there for years but you presumably didn't have a full year salary for last year? Does this mean the difference between basic rate tax (22%) and higher rate tax (40%)?.

Did you spend some months just receiving smp rather than usual full pay?

sounds like you might be right - I need to dig out all the payslips and check. I went on mat leave july 2007 when got 6 months full pay then in jan/feb 2008 or whatever it was it went to 3 months smp then nothing, then I went back on payroll in July 2008 again, then had a months leave and went back to work so maybe that is why. I am normally a high rate tax payer but I guess I earnt smp for feb/march/april 2008, then nothing for may/june and normal salary for last 6 months of the year - must be something to do with all that I suppose.

the company tax person is phoning me back tommorow so hopefully she can clarify.

thanks for pointing that out - i sm sure it must be the reason.

and that does make sense becasue the tax office person said the april one was right based on the figures and my tax code.

damn - was used to that 300 quid!

So you earned April SMP, 2 months 0, then 9 months at full pay - that will be the answer then as your tax free pay was split over 9 months plus one very lowly paid one!

sounds right to me but I still don't quite understand what you mean about the tax free pay bit being spread - surely your tax free amount is your tax free amount for the year i.e whatever you earn in 12 months? (am really clueless about this stuff, sorry). or are you saying they couldnt take any tax of me in the months i earnt nothing so they took less in the months when I did?

Yes the affect of not earning in the early months of the tax year would mean a bigger tax free allowance per month for the other 9 months.

Eg tax free allowance of £3,600= £300 per month for 12 months.

don't earn for the first 3 months for the last 9 months the tax free allowance per month would be £400

I see - thanks for the explanation. Intellectually, I totally understand. Emotionally, my brain is screaming "F**ckers, give me my 300 quid back!!!"

oh well, the price we pay for having children I suppose, I'll just add it to the list .....

No, it's not your tax free pay that is creating the difference, and tax free pay is not spread in the way Cargirl suggests - if you don't earn anything for 3 months, you get 4 months worth in month 4 (£1,200 in the example), not spread over the rest of the year.

Hopefully your payroll department will provide calculations for March and April that will show you why you went over the higher rate threshold by earning more than (£6,475 + £37,400)/12 in April and therfore paid 40% tax on the earnings over that amount. In the year to March, you could have earned up to (£6,035 + £34,800) before paying 40% tax.

so you're saying I went over the 40% in March and April therefore paid more income tax?

I am guessing that you did in April (because it is the first month of the 2009/10 tax year and is therefore looked at in isolation), but didn't in March (because that was the last month of the 2008/9 tax year and so the whole year is taken into account and you earned nothing for 3 months of that year).

Sorry, that still looks as clear as mud, but I can't do any better at the moment

i think that is right as work have said:

Last tax year you were on maternity leave and returend to work in July. Your taxable earning for the full tax year didn't reach the 40% therefore it was taxed only 20%. In April a new tax year started and your earnings reached the 40% bracket

which I understand but I still dont really get how that can make my take home pay £300 less a month when you only pay 40% on the bit over the threshold. which is 37400 right? which doesnt sound right as I would have reached that before April.

thanks for all the explanations - I think it is starting to penetrate. and i'm not getting that noney back!

How much did you earn for your last tax year??? Probably just less than 9 full months?

Part of July to April 5th?

Also above it says to have paid 40% tax last year then you would have needed to earn £6,475 + £37,400 in those 9 months.

Sorry wrong figures for last tax year you could have earned 6,035 + £34,800=£40,835 before you paid tax.