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Posted Fri, 26 Jan 2024 13:35:47 GMT by
As this is the first year I earned over £100K I've had to fill out a self assessment. The only income I have had was as a full time employee of UK companies who payed PAYE on all of my wages from them. Upon completing the self assessment I am told I now owe over 3K in tax - am I missing something here? I assumed PAYE covered all due taxes from wages?
Posted Tue, 30 Jan 2024 17:39:02 GMT by HMRC Admin 8
Hi,
It sounds like you have had full personal allowances in the year but as your income is over 100k, you are not due these:
Income Tax rates and Personal Allowances
Thankyou.
Posted Tue, 30 Jan 2024 20:59:29 GMT by maxb
PAYE only reacts correctly on its own to the increasing tax rate as you go up through the 20%, 40%, 45% bands. It fails to react automatically to someone's pay starting to move above the £100k threshold for the Personal Allowance being gradually lost. PAYE only handles that if HMRC become aware of the amount of expected full year earnings, early enough to issue a tax code change to account for the lost Personal Allowance. It's easy for that not to happen, especially if some of the pay comes in the form of an annual bonus rather than steadily throughout the year - and then you end up finding you've been under-taxed at Self Assessment, and have to pay the extra.

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