Tax Code change after bonus
Discussion
Hi all,
I started my financial year on a tax code of 1100L, but received an additional months salary last month and was switched over to 670L tax code and it looks like I paid more tax than necessary that month..
The usual annual salary + bonus would put me just under £32k, so I wouldn't of hit the 40% bracket - unless they assumed the bonus would continue every month?
But have received this months payslip and I'm still on 670L - Can anyone shed any light on why? Should I return to 1100L or will I get a rebate next year? My HR have told me to call HMRC, but I figured before I stick myself in an hour long phone queue I'd ask the masters of PH!
I did receive my company car about 4 weeks ago too.. I'm not sure if that changes anything as the tax code was changed a month before I received the car?
I started my financial year on a tax code of 1100L, but received an additional months salary last month and was switched over to 670L tax code and it looks like I paid more tax than necessary that month..
The usual annual salary + bonus would put me just under £32k, so I wouldn't of hit the 40% bracket - unless they assumed the bonus would continue every month?
But have received this months payslip and I'm still on 670L - Can anyone shed any light on why? Should I return to 1100L or will I get a rebate next year? My HR have told me to call HMRC, but I figured before I stick myself in an hour long phone queue I'd ask the masters of PH!
I did receive my company car about 4 weeks ago too.. I'm not sure if that changes anything as the tax code was changed a month before I received the car?
Edited by Poko on Friday 2nd September 11:55
Richard-G said:
I don't think that's the cash equivalent. Unless you've got a plug in hybrid?
Ah - it's still all a bit new to me and I'm a little confused 
Car's a Mini Cooper S JCW - Seems to add up I guess.. So the tax I pay comes from reducing my allowance from £11k to £6.7k, so with 20% of the difference.. £860? Is that the tax I'd pay for having the car.. Or do I still have to pay the £1,295 PTL value as well? So £2k+ a year?
Eric Mc said:
Surely you would have checked the tax impact of having a company car BEFORE you agreed to it?
I checked the BIK/PLC and it was £1,295 a year - I just didn't realise it was taken from reducing my allowance, so the cost I knew - just how it gets taken was something I didn't quite know I suppose.I needed a new car anyway and a company car fitted me perfectly, where else could I get a car that isn't a low spec Fiesta for £107 a month that includes insurance and servicing?
£1295 cost as a 20% tax payer is about right for a Mini JCW, with a list price of around £23K and co2 giving 28% BIK charge.
But, the £1295 you pay is the equivalent of a BIK surcharge of £6475. So your tax code should be 452L instead of 1100L.
In other words, if you earn £30K with no car, and they them give you a Mini JCW, you will get taxed as if you earn £36475. So you pay 20% on £6475 you don't actually earn, hence the £1295 cost to you.
The way they do that is by only allowing you £4525 tax free instead of £11000 tax free. So you pay 20% on an extra £6475.
But, the £1295 you pay is the equivalent of a BIK surcharge of £6475. So your tax code should be 452L instead of 1100L.
In other words, if you earn £30K with no car, and they them give you a Mini JCW, you will get taxed as if you earn £36475. So you pay 20% on £6475 you don't actually earn, hence the £1295 cost to you.
The way they do that is by only allowing you £4525 tax free instead of £11000 tax free. So you pay 20% on an extra £6475.
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