Is the tax i'm paying correct?

[James_N]

Hi There

I've tried googling but thought I would post here as its blagging my head!

I work in the NHS, doing a part time admin job earning £880 a month after deductions.
my only deduction on this wage slip now its the new financial year is my pension contributions.

I also work on the bank doing 8ish hours a week regular overtime netting (this month anyway) £350 after deductions.

I notice on my bank wage slip, i have been deducted nearly £100 (PAYE £57 and NI £42.87)

I was under the assumption that I wouldn't pay tax until I hit the £12,570 threshold and then I would start paying tax.

Is the above correct? based on the above, i'm not sure if this is correct or not.

Many Thanks
James

[Collectingbrass]

If you were in a single job that was going to take you over the threshold (eg an annual gross salary of £30k) I would expect that you would pay tax as a PAYE employee each month, rather than get to Month 5 (say) then start paying as you have crossed the threshold.

Your second job is more complicated and others will know more than me. It may be that the bank are assuming you have already crossed the threshold and are deducting the 20% tax on your full earnings for that job rather than their proportion of what exceeds the threshold. On the upside this does mean that you will have overpaid - for this job - when you get to the end of the tax year and HMRC may owe you a refund.

I would speak to HMRC and make sure your tax code is correct for your circumstances. I would then speak to both payroll departments (through HR) and make sure you understand how they are treating your tax. I will say your NHS one doesn't sound right to me but that may be that your gross pay from that job doesn't take you over the tax and NI threshold. I would also join a union in your NHS role and ask them, it is what they are for.

[James_N]

Just as an update, i've checked my online tax account and they have my payroll number from my main job, but they have no details of my payroll number for my bank shifts. Would this make a difference?

[Countdown]

James_N said:

Hi There

I've tried googling but thought I would post here as its blagging my head!

I work in the NHS, doing a part time admin job earning £880 a month after deductions.
my only deduction on this wage slip now its the new financial year is my pension contributions.

I also work on the bank doing 8ish hours a week regular overtime netting (this month anyway) £350 after deductions.

I notice on my bank wage slip, i have been deducted nearly £100 (PAYE £57 and NI £42.87)

I was under the assumption that I wouldn't pay tax until I hit the £12,570 threshold and then I would start paying tax.

Is the above correct? based on the above, i'm not sure if this is correct or not.

Many Thanks
James

As you appear to be getting two separate wage slips it looks like your Employer is treating it as two separate jobs. (They're not paying your Admin salary and the bank O/T on the same payslip).

Therefore you are probably being taxed at BR on your Bank wages (your £12,570 tax allowance is being wholly allocated to your main job). This means that you'll pay 20% on ALL of your bank income (ie you wont get a personal allowance)

You have two options - reclaim any overpaid tax at the end of the year (you probably won't overpay because your personal allowance will be used up by your main job). Or you can log onto the Govt Gateway website and allocate your personal allowance across both jobs.

[James_N]

Countdown said:

As you appear to be getting two separate wage slips it looks like your Employer is treating it as two separate jobs. (They're not paying your Admin salary and the bank O/T on the same payslip).

Therefore you are probably being taxed at BR on your Bank wages (your £12,570 tax allowance is being wholly allocated to your main job). This means that you'll pay 20% on ALL of your bank income (ie you wont get a personal allowance)

You have two options - reclaim any overpaid tax at the end of the year (you probably won't overpay because your personal allowance will be used up by your main job). Or you can log onto the Govt Gateway website and allocate your personal allowance across both jobs.

This looks like what has happened but then i found this on the government gateway:




so that looks like its being treated as one job, but I have two payroll numbers. Its all very confusing. I'll have to contact payroll and see whats going on!

[Spevs]

I'm no expert but if you are getting £880 per month X 12 this equates to £10,560 per annum, plus £450 per month (your Bank job before deductions) X 12 this potentially equates to £5,400 per annum, adding both together adds up to £15,960 annual income. Taking off the personal allowance of £12,570 leaves £3,390 on which tax & Ni is payable. The tax element @ 20% for the year would be £678 divided by twelve results in £56.50 per month. As I've said I'm no expert but it may explain what's going on.

[Countdown]

James_N said:

This looks like what has happened but then i found this on the government gateway:

so that looks like its being treated as one job, but I have two payroll numbers. Its all very confusing. I'll have to contact payroll and see whats going on!

So I think what is happening is that the figures for both jobs are being combined on the Gov gateway because your Employer only has one PAYE registration. However if you are receiving TWO payslips then you will have TWO jobs and two separate lots of tax and NI allowances.

By the way being treated as having two jobs means that you won't overpay tax but you will save on NI (you get full NI allowances on both roles)

[James_N]

Countdown said:

So I think what is happening is that the figures for both jobs are being combined on the Gov gateway because your Employer only has one PAYE registration. However if you are receiving TWO payslips then you will have TWO jobs and two separate lots of tax and NI allowances.

By the way being treated as having two jobs means that you won't overpay tax but you will save on NI (you get full NI allowances on both roles)

Should I add my bank role as another job on my HMRC account then do you think?

[Countdown]

James_N said:

Should I add my bank role as another job on my HMRC account then do you think?

I dont think you CAN do (?) but it wqon't make any difference as it looks like your Employer's Payroll is submitting a combined record of all your earnings each month. In other words even if you CAN create a new job it won't get populated with any payroll data.

I wouldnt worry about it. Based on the info you've provided I don't think you'll be overtaxed.

[James_N]

Countdown said:

I dont think you CAN do (?) but it wqon't make any difference as it looks like your Employer's Payroll is submitting a combined record of all your earnings each month. In other words even if you CAN create a new job it won't get populated with any payroll data.

I wouldn't worry about it. Based on the info you've provided I don't think you'll be overtaxed.

Super thanks! That's all I wanted to know

Much appreciate all the responses

[Eric Mc]

Do you know what Tax Codes are being applied to your two salaries?

The Tax Code being applied by each employer should show on the payslips.

[AndyAudi]

James_N said:

I was under the assumption that I wouldn't pay tax until I hit the £12,570 threshold and then I would start paying tax.

Is the above correct? based on the above, i'm not sure if this is correct or not.

Many Thanks
James

Tax is calculated cumulatively as you go along, the aim being you don’t get less take home in later months.

The fact the 2 jobs are with same employer’s interesting but
as April is the 1st month the amount you’ll earn before being taxed is 1/12 * £12,570 (assuming you have a regular kind of tax code) = £1050 you will pay tax on anything above that.

[James_N]

My tax code is the regular 1257L so this sounds right.

Many Thanks for all the responses.

[Countdown]

James_N said:

My tax code is the regular 1257L so this sounds right.

Many Thanks for all the responses.

If you're getting two separate payslips they will each have their own tax code. The combined tax code shouldn't exceed 1275L (unless one of them says W1/M1)

[James_N]

Countdown said:

If you're getting two separate payslips they will each have their own tax code. The combined tax code shouldn't exceed 1275L (unless one of them says W1/M1)

Bank Payslip code is 1257L CUMUL

Normal Payslip is also 1257L CUMUL

[James_N]

Same company

Same tax code

The only difference is my payroll number. I have the same payroll number for both but my normal job has -2 at the end and my bank wage slip has -3 at the end. Everything else is the same

[Eric Mc]

James_N said:

Countdown said:

If you're getting two separate payslips they will each have their own tax code. The combined tax code shouldn't exceed 1275L (unless one of them says W1/M1)

Bank Payslip code is 1257L CUMUL

Normal Payslip is also 1257L CUMUL

That is not correct.

The code of 1257L represents your overall tax allowance (which covers ALL your income from all sources) for 2023/24 of £12,570.

You only get the one tax allowance so if you have two employments (as you do), one employment should attract the 1257L code and the other employment should show a code of BR (Basic Rate) Tax.

If each individual employment doesn't give you a Gross Salary exceeding £12,570 then the main employment gets most of the coding and what's left over gets allocated to the other employment.

An example -

Employment 1 - Gross Salary £10,000
Employment 1 - Gross Salary £5,000

What happens is that Employment 1 is allocated a coding of 1000L (i.e. £10,000) and Employment 2 is allocated a coding of 257L (£2,570)

This means that no tax will be deducted from your Employment 1 salary and tax of £486.00 (£5,000 less £2,570 x 20%) will be deducted from your Employment 2 salary.

I am ignoring the National Insurance deductions completely so as not to confuse the issue.

Edited by Eric Mc on Thursday 27th April 12:03

[Doofus]

Each month you effectively get 1/12 of the £12,570 allowance, so if your gross pay in month 1 (April) goes over 12570/12 (£1,047.50), then the excess is subject to tax.

For each subsequent month, it's your year-to-date cumulative gross pay, less (1,047.50 x the month number).

So in, say, July tax will be payable on your gross pay for April, May, June and July, less £4,190. The tax actually payable will be that calculation less what you've already paid in April, May and June.

In this way, when you get to next March, tax will be payable on your whole year's gross, less £12,570. Less what tax you've already paid.

This is very simplified, but it seemed to me you were struggling with the cumulative way in which tax is calculated. You don't just pay zero tax until your gross pay hits £12,570.

[Countdown]

James_N said:

Countdown said:

If you're getting two separate payslips they will each have their own tax code. The combined tax code shouldn't exceed 1275L (unless one of them says W1/M1)

Bank Payslip code is 1257L CUMUL

Normal Payslip is also 1257L CUMUL

I think your payroll department has messed up somehow by allocating you the personal allowance twice. Don't worry, it's easily fixable but you might have underpaid some tax.

Email them and say "You appear to have given me the full personal Allowance for both of my roles. Please could you check that this is correct?"

[The only reason i could think of is if you had to fill in a P46 (New starter Form) when you started the bank role and you inadvertently ticked the "This is my only and main job and I have not had another job since 6th April" box"..............]

[James_N]

Countdown said:

I think your payroll department has messed up somehow by allocating you the personal allowance twice. Don't worry, it's easily fixable but you might have underpaid some tax.

Email them and say "You appear to have given me the full personal Allowance for both of my roles. Please could you check that this is correct?"

[The only reason i could think of is if you had to fill in a P46 (New starter Form) when you started the bank role and you inadvertently ticked the "This is my only and main job and I have not had another job since 6th April" box"..............]

I emailed them and got this response:

"As your earnings from both posts are added together each month and treated as one we apply the same tax code to both posts"

seems despite getting two wage slips, my income is counted as one job.