Income tax calculations when going to higher tax

[sherbertdip]

I recently arranged for a member of staff to have temporary promotion for 6 months, we are now 2 months into that period which will end mid March, but their pay suggests they are being taxed for too much at 40% rate, they came to me asking if i know what they should "take home" I haven't a clue. The facts are:

Normal grade pay £38k
temporary grade pay £49k
Taxed on PAYE

so, normally on 20% rate, then for 6 months rises into 40% rate, but over the tax year their pay will be 49-38/2 + 38 = £43.5k, so over the year they should only pay 40% on a couple of thousand pounds.

It looks like so far they being taxed on the 7k ish over the threshold at 40% each month as if that were their permanent salary.

Should it be that they should pay 20% rate until they actually reach the 40K threshold?

Or, will it even it'self out with a tax code change next year to give them their tax back?

I have advised them to contact their tax office, so this is really for my benefit!

[2 sMoKiN bArReLs]

This is a handy tool

http://tools.hmrc.gov.uk/hmrctaxcalculator/screen/...

[Ynox]

Will probably get a tax rebate from HMRC at the end of the year. I used to see similar occurring on bonus month when I was borderline between the 2 rates.

[2 sMoKiN bArReLs]

Ynox said:

Will probably get a tax rebate from HMRC at the end of the year. I used to see similar occurring on bonus month when I was borderline between the 2 rates.

Only if on week 1/month 1 tax code. If not on week 1/month 1 code the payroll takes account of the cumulative calculation as it goes along

[blank]

Is there a company pension they pay into?

As above, they seem to assume you'll be paid x amount for the rest of the year. They'll probably just get a rebate.

[sumo69]

Sounds like there is something amiss with his tax code - what is it?

David