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Posted Wed, 25 Sep 2024 11:14:55 GMT by Ian P
I’ve had numerous issues with the tax office since leaving the military in 2016 mainly centred around underpayment of tax. Upon leaving the military I took up full time employment with a company and remain there to this day. For the first 4 years despite my understanding that both salary and pension earnings were taxed at source (PAYE) I was sent an annual tax bill detailing underpayments in tax and it finally transpired, following many annual phone calls, when I spoke to someone who knew what they were talking about that they had my primary income against my pension and not against my salary earnings so this was adjusted to my pension being set at 40% tax and all seemed to settle down. For the year Apr 24 – Apr 25 my projected earnings were £68,068.92 (5,672.41 Monthly) and MoD Pension £32,525.00 From Apr – May my tax code was 1227T, my pension tax code was DO (40%) which I believe was correct. However, this June I received my pay slip and it included a company pay rise and a one off Bonus all in the same pay packet. My salary increased to £68,502.98 and my full bonus was £6,857.55. My wage slip shows the full 40% tax was paid on the bonus. I accessed my tax record just to check if my salary had changed to take into account my pay rise but found to my horror instead of £68,502.98 it read £93,000. I assume the tax office or computer made this adjustment on the basis that my monthly take home pay had increased significantly because of the bonus payment. I therefore changed the earnings amount back myself to £74,000 which also took into account my Bonus which I thought was the right thing to do. My July pay slip was normal with a tax code of 1227T and Tax Basis Cumulative, but then my August pay slip changed to 850T and I noticed my Tax basis changed to Week1 / Month One. Thus a loss of earnings for the month of of £131.33. Having received a pay rise this was somewhat of a shock. I immediately contacted the tax office for an explanation, I confirmed by new salary, the bonus I’d been paid and my pension salary but after an hour and much frustration was repeatedly told that I was paying the correct amount of tax with no explanation as to the code change. Having checked my tax account yesterday I’ve noted that my BT Tax allowance has remained at 850T. Thus I’m utterly confused and am concerned that I may be facing a future tax bill as I simply do not trust the tax office. Obviously I’m under the belief that all my tax (company and Pension) is collected at source and that my tax codes should be 1227T and DO respectively and that my bonus is also taxed at source. By adding my new salary of £66,502.98, BT Bonus of £6857.55 and MoD Pension of £32,525 from June I have a new combined annual total of £105.885.53. Having conducted some research the only thing I have found which may have a bearing on my tax code is a notice on the Gov.UK website which details that earnings over £100.000 are subject to tax of £1 from every £2 earned. Is this the missing link which the tax office were not able to advise me on and if so are the new tax codes correct? I hope I’ve been able to lay out my dilemma appropriately and would appreciate any guidance you can give me.
Posted Thu, 03 Oct 2024 14:24:55 GMT by HMRC Admin 32 Response
Hi,
Your PAYE record adjusted your tax code because it added up you employment income, bonus and pension and calculated you will have more than £100,000 in income.  
This means for every £2 over £100,000, your personal allowance reduces by £1. The revised tax code reflected this. 
For a more detailed answer to this question, you would need to contact our Self Assesment team below.
Self Assessment: general enquiries
Thank you.

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