Working out tax refund
Discussion
Hi guys,
Probably a stupid question but I thought someone on here might now. I took a 12k paycut in June but didn’t ask for a tax code change (busy trying to keep my job!) and got notified that my tax code for 2021/2 is changing from -£846 to +£5200.
Obviously I’ve paid too much tax from Jun to the end of this financial year, I’m just wondering if I can work out what refund I’m likely to get though. I’m a higher rate taxpayer and the paycut shouldn’t make any difference to my tax bracket. The take home difference was approx £400/month.
Sorry, first world problems I know and I was very lucky to keep my job, which is still pretty tenuous at best, hence I was just wondering if I’ll get a decent lump back to put into my potential redundancy savings fund.
Edit: I do a tax return yearly anyway so assume the changed tax code for next year isn’t hmrc refunding me in PAYE 2021/22?
Probably a stupid question but I thought someone on here might now. I took a 12k paycut in June but didn’t ask for a tax code change (busy trying to keep my job!) and got notified that my tax code for 2021/2 is changing from -£846 to +£5200.
Obviously I’ve paid too much tax from Jun to the end of this financial year, I’m just wondering if I can work out what refund I’m likely to get though. I’m a higher rate taxpayer and the paycut shouldn’t make any difference to my tax bracket. The take home difference was approx £400/month.
Sorry, first world problems I know and I was very lucky to keep my job, which is still pretty tenuous at best, hence I was just wondering if I’ll get a decent lump back to put into my potential redundancy savings fund.
Edit: I do a tax return yearly anyway so assume the changed tax code for next year isn’t hmrc refunding me in PAYE 2021/22?
Edited by Siko on Sunday 7th February 10:01
Siko said:
Edit: I do a tax return yearly anyway so assume the changes tax code isn’t hmrc refunding me in 2021/22?
My guess is they ARE refunding you via your tax code. You’re going to pay roughly £2k less tax in 21/22 than you did in 20/21.On the notification letter they send out normally it explains why your tax code has changed. Also if you’ve got a HMRC account you should be able to go on there to find out how they’ve calculated it.
Countdown said:
My guess is they ARE refunding you via your tax code. You’re going to pay roughly £2k less tax in 21/22 than you did in 20/21.
On the notification letter they send out normally it explains why your tax code has changed. Also if you’ve got a HMRC account you should be able to go on there to find out how they’ve calculated it.
Thanks for the reply....I guess until I submit my return I won’t know for sure. On the notification letter they send out normally it explains why your tax code has changed. Also if you’ve got a HMRC account you should be able to go on there to find out how they’ve calculated it.
Siko said:
Doofus said:
I'm not entirely certain why taking a pay cut requires a new tax code.
No idea. A mate who was in almost the same situation noticed the hmrc and got a new tax code instantly. Maybe it’s the marginal tax rate or something? Genuinely no idea, hence why I asked.Countdown said:
It may have meant OP moving between different tax bands, or losing some BIK when he changed his job. There are other factors as well, such as if OP has more han one PAYE job.
That's fair enough, but we haven't been given any of that information, just told about a 12k pay cut.Siko said:
Hi guys,
Edit: I do a tax return yearly anyway so assume the changed tax code for next year isn’t hmrc refunding me in PAYE 2021/22?
I can't recall exactly what it shows now, but isn't there a page on HMRC's self-assessment site that shows salary and tax for current year? Maybe that adjusts as tax code changes.Edit: I do a tax return yearly anyway so assume the changed tax code for next year isn’t hmrc refunding me in PAYE 2021/22?
Not sure what "decent lump sum" is, but any refund isn't going to be dramatic.
Tax bands and other factors are affected by overall income levels. Therefore, if you are normally a higher rate taxpayer and pay some tax at 40% - or you have salary over £100,000 and normally do not get full personal tax allowances, then any significant income reductions in a tax year will impact on the level of allowances you are entitled to or how much tax you need to pay at 40%. In the PAYE system, such changes MUST be adjusted by altering the PAYE Tax Code.
It is likely that HMRC will not get it completely right as playing with tax codes is, in effect, trying to guess what a persons overall situation is going to be throughout the tax year. However, as you complete a self assessment tax return after the end of each year, it gives you the opportunity to "fix" any incorrect assumptions made by HMRC.
If you feel, during the tax year, that HMRC are really getting it wrong, it is advisable to phone them to check what they are doing and why they are doing it and maybe give them more correct information as they may be making incorrect assumptions.
It is likely that HMRC will not get it completely right as playing with tax codes is, in effect, trying to guess what a persons overall situation is going to be throughout the tax year. However, as you complete a self assessment tax return after the end of each year, it gives you the opportunity to "fix" any incorrect assumptions made by HMRC.
If you feel, during the tax year, that HMRC are really getting it wrong, it is advisable to phone them to check what they are doing and why they are doing it and maybe give them more correct information as they may be making incorrect assumptions.
Thanks Eric (nice to see you out of the Planes forum 
). I had a play around and submitted an adjusted estimated salary to hmrc which has changed my tax code yet again (for the better). No idea if I’ll get a refund or not, on the upside it’s kind of funny seeing how drastically increasing my pension payments doesn’t drastically alter my income.
). I had a play around and submitted an adjusted estimated salary to hmrc which has changed my tax code yet again (for the better). No idea if I’ll get a refund or not, on the upside it’s kind of funny seeing how drastically increasing my pension payments doesn’t drastically alter my income. Eric Mc said:
If they are using the tax code to correct your tax situation, it is unlikely you will get a tax refund in cash/bank payment form. Instead, you will get the refund by paying less PAYE for the rest of the tax year.
I've just had a lump back in salary due to a re-coding - I got about £1500 extra in my January pay, which was handy as I owed £2K for 19/20 through self-assessment.The re-coding is completely messed up - they moved all my tax code to one employer, where it was split between two employers before.
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