Self Assessment personal allowance 12570 but PAYE allowance 12579.

My only income is through PAYE, I have earned under £100,000 so I was expecting my full allowance from my tax code of 12579. I have checked my P60 figures and payslips against the PAYE HMRC calculator, I have also ran the payroll through HMRC basic tools and have used two other payroll softwares to verify the PAYE code and they all agree with the tax I have already paid with a tax code allowance of 12579. I have contacted the software vendors who have said they calculate tax and use tests supplied by HMRC and this is the correct way to calculate PAYE due. My self assessment calculation is only allowing 12570, because of the difference it is telling me I owe tax. Can you please help as I am not sure how I get this corrected/sorted? Thank you.

I don't think it's possible to have a PAYE tax free amount of £12,579 because tax codes only deal with tax free amounts in multiples of £10. Furthermore, the amount in your tax code is not an allowance itself - rather, it is an attempt to summarize all allowances and other personal circumstances that apply to you, into an estimate that controls how PAYE is applied during the year. At the end of the year, Self Assessment looks back over what happened in the year, and charges/refunds tax to correct for anything that wasn't exactly right under PAYE. You need to look at the reasons you were given a non-standard tax code, and ensure all those reasons are declared in the proper parts of your Self Assessment.

Hi,

The personal allowance for 2022 to 2023 is 12570. Any amount above this would be in respect of additional allowances claimed.

You may have claimed relief for expenses or a pension that has increased this amount and you can check this on the tax code issued to you.

Thank you.

I agree with S4mmyhelp. For 2022/2023 tax year I had no other taxable income besides what I earned through PAYE. When I log into my account and browse to https://www.tax.service.gov.uk/tax-you-paid/2022-2023/right-amount it shows: "You paid the right amount of Income Tax for 6 April 2022 to 5 April 2023" The tax amount matches the amount on my P60 for Tax year to 5 April 2023. However when I completed my Self Assessment in calculated it said I owed £2.00 in tax. I have paid the £2 but I am puzzled why the self-assessment calculated the extra £2.00 tax. I have always thought any tax code e.g xyx meant a personal tax allowance of £xyx9.00. I think the tax tables show the tax-free amount are based in £xyx9.00.

Hi,

On the tax code you would add a zero to the end. For the current 2023 to 2024 tax year the standard code is 1257L giving tax free allowances £12570. There can be a slight difference at the tax year end depending if wages are rounded up or down when the payroll is processed.

Thank you.

Could HMRC please provide comment on the following. Tax code allowances are determined using Pay Adjustment Tables that are published by HMRC and are the basis for all PAYE calculations whether performed manually or computerised. The tables can be found at https://www.gov.uk/government/publications/tables-a-pay-adjustment-tables Further specifications for software developers are provided by HMRC at https://www.gov.uk/government/publications/payroll-technical-specifications-income-tax I refer you to pages 3 and 68 of the main PDF found at the first URL where it confirms that for monthly paid employees, for each multiple of 500 of your tax code you receive £5000.04 of allowance with the remainder of your tax code receiving the amount given against the respective number. For tax code 1257L the total annual allowance would therefore be calculated as £5000.04 + £5000.04 + £2579.04 which totals £12579.12. If HMRC specifications determine that £12579.12 is the allowance due, and tax subsequently calculated using this value, why do HMRC use a much lower value of £12570? Surely HMRC should use the value that they publish in their own manuals and specifications?

That's really interesting - I'm old enough to remember helping my parents look things up in a paper copy of Tables A to complete deductions working sheets. I didn't realise quite how much complex rounding went into those tables, to facilitate people doing payroll on paper. Nowadays, hardly anyone does payroll on paper, but all the software maintains all the complicated rounding, to ensure everyone is treated the same regardless of how their payroll is managed. This turns out to mean that PAYE deductions are actually set up to be slightly more generous than actual tax law allows for, allowing small rounding issues to be resolved in the taxpayer's favour throughout the year... And then, at the end of the year, Self Assessment looks back over the entire year, and collects a few pounds of underpaid tax due to the rounding. I guess this goes unnoticed for many people, as often people's reason for needing to complete Self Assessment involves larger amounts being paid or refunded.

Hi, I am not an Admin but you are mixing up two different things. PAYE might give a tax free allowance of £12579.12. But self assessment is calculating your income tax. It is not calculating PAYE. Only your employer or pension calculate PAYE. So self assessment doesn't use the tax code allowance of 12579. It uses the personal allowance, which is 12570