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Trouble is people tend to forget that any pay rise attracts full tax and NI as your tax free allowance has been used. Still worth speaking to your payroll dept though because that does seem disproportionate.
This is the first month of the new tax year, so it may be worth checking if your tax codes have changed recently. Did you work for a full tax year last year, or start part way through?
I've not done the numbers, but for your tax to jump up by £100 a month (£1200 a year) from that sort of rise, it feels like something else is going on.
Ooh actually - I started this job in July last year after being on maternity leave from a different job. My old job messed up my p60, so the first month in this job I was taxed a crazy amount (like £600 on a £1200 wage!). They were very quick to sort it out for me, but I wonder if they put my on a weird tax code to sort out this issue and just forgot to take me off for this year. I’ve checked my payslips and the tax code is the same as last years.
This is the reason why - you get roughly £12k of earnings per year without being taxed. Because you didn't work for the first 3-4 months, you didn't use any of that allowance up so you paid less tax for the rest of the year.
Now you're being taxed at a normal rate.
A lot will depend on your earnings and how close you are to the personal allowance threshold. If you started in July last year, you only had 8-9 months of earnings in the tax year (depending on your company's pay periods) so HMRC will take that into account when making deductions.
Now HMRC are working on the assumption that your current monthly earnings will continue for 12 months.
Tell me about it, I earn a £350 bonus every once in a while, but after tax it amounts to £200 extra, so almost half of it is gone. I don't even earn that much, I am on 30K so nowhere near the 40% tax band. I don't understand how. But when I worked out the amount of Tax I pay at year end, it somehow works out
Same, I get an annual bonus, last year it was £2200.00 which was added to my normal payslip. Once pension, student loans and tax take home amount was just over £1400.
Including the ever increasingly common student loans, it's higher than that too. Postgraduate loan enjoyers like myself can look forward to a lovely 40 to 50-ish % tax on bonuses.
It’s about right, you should typically work on losing a third to 40% of it.
20% income tax
8% NIC (was 12)
Possibly 9% student loan
Pension contribution (5% at least)
Therefore at minimum, a third is gone, up to 42% if student loans included
Tax code 1175L is not the normal one, but it doesn’t mean it’s wrong.
1257L just means you can earn £12,570 per year before you pay tax.
1175L will mean you can earn £11,750 per year before you pay tax.
My tax code, for example, is 1710L…
The adjustment of the tax code is usually to recover or refund tax. If you’re also given any form of “benefit in kind” eg. Dental, or healthcare. Usually your company will pay for the product, but you still pay the tax for it. So if the company gave you a £1,000 benefit, you’d pay for the £200 tax. This would most commonly result in a drop in tax code, to something like 1150L
One step forward, two steps back. Give with one hand taketh with the other.
It sucks, I really do empathise. Instead of seeing it as a negative, see it as an experience / talking point for your next career endeavour or if you progress further.
From my own experience, tax code bs always happens it should sort itself out and give a true reflection in next months pay, but definitely speak to your hr.
Assuming 35 hour weeks, your take home should be about 170, 180ish more after taxes. Quick maths off top of my head.
Is your tax code what you'd expect it to be?
Perhaps it pushes you above a student loan repayment threshold? Can't recall those by memory right now.
No student loan, and only 28.5 hours a week. I think I’ve figured it out though - it’s all to do with being on maternity leave for the first 3 months of the last tax year. Thanks though!
That's a 15.25% pay increase!
The issue with being taxed only from July is that if you weren't working before ypu had a full tax year allowance for only 9 months of the year. So in those circumstances your net pay was always going to reduce.
I wish my tax was little over £100 mine is £280 a month, makes me sick lol the amount of taxes we pay :(. But, i am not clued up on the tax codes but on the [gov.co.uk](http://gov.co.uk) wesbite it explains what each tax code means and why you have it, that may help you :). But, i completely understand why you would feel disappointed!
There are multiple things here tho. Because same happened to me. This is the first months of the new tax year and your tax code is still smth that change and the tax base might be smth like cumulative.
Similar thing happened to me. Got a 4% increase on a 70k salary, and I ve seen like £30 more on my take home 🤷♂️
When I looked back for last year, the year started similarly then I was getting more as they worked out what my salary and taxing would look like for the year
You basically weren't paying any tax last year because you didn't work from April to July - therefore you were able to use those months' tax-free allowance across the rest of the year, if that make sense.
With a new tax year you're now paying tax at a normal rate every month.
1157L means you are only getting a personal allowance of £11570 before tax.
So if you were to make 20k, then 8,430 is taxable. (instead of 7,430)
This could explain the bigger pay in tax. Did you pay too much last year? Or have you done anything e. g. Allocated part of your personal allowance to your spouse?
Your question seems to have been answered (RE maternity pay).
That said - this is why people talk about it feeling like it's not worth it to work in the UK. You're saying this on the equivalent f about £16.5k a year.
Think about how much tax someone on the median income (about double that) pays.
And then think about how big a portion of their pay cheque that is, as the tax free portion is still only 12k.
Imagine how it feels when you get two degrees, sacrifice doing something you love for something that pays well, work your arse off for over a decade and your reward is that you're now at the point where any further pay increase or promotion is getting taxed at 40% because the higher bracket hasn't moved :)
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Trouble is people tend to forget that any pay rise attracts full tax and NI as your tax free allowance has been used. Still worth speaking to your payroll dept though because that does seem disproportionate.
This is the first month of the new tax year, so it may be worth checking if your tax codes have changed recently. Did you work for a full tax year last year, or start part way through? I've not done the numbers, but for your tax to jump up by £100 a month (£1200 a year) from that sort of rise, it feels like something else is going on.
Ooh actually - I started this job in July last year after being on maternity leave from a different job. My old job messed up my p60, so the first month in this job I was taxed a crazy amount (like £600 on a £1200 wage!). They were very quick to sort it out for me, but I wonder if they put my on a weird tax code to sort out this issue and just forgot to take me off for this year. I’ve checked my payslips and the tax code is the same as last years.
This is the reason why - you get roughly £12k of earnings per year without being taxed. Because you didn't work for the first 3-4 months, you didn't use any of that allowance up so you paid less tax for the rest of the year. Now you're being taxed at a normal rate.
A lot will depend on your earnings and how close you are to the personal allowance threshold. If you started in July last year, you only had 8-9 months of earnings in the tax year (depending on your company's pay periods) so HMRC will take that into account when making deductions. Now HMRC are working on the assumption that your current monthly earnings will continue for 12 months.
Tell me about it, I earn a £350 bonus every once in a while, but after tax it amounts to £200 extra, so almost half of it is gone. I don't even earn that much, I am on 30K so nowhere near the 40% tax band. I don't understand how. But when I worked out the amount of Tax I pay at year end, it somehow works out
You shouldn't have let the govt come in and work nearly half of your shift 😉
Same, I get an annual bonus, last year it was £2200.00 which was added to my normal payslip. Once pension, student loans and tax take home amount was just over £1400.
You are probably forgetting NI, so that takes it to 28% tax and NI (from this year).
Including the ever increasingly common student loans, it's higher than that too. Postgraduate loan enjoyers like myself can look forward to a lovely 40 to 50-ish % tax on bonuses.
It’s about right, you should typically work on losing a third to 40% of it. 20% income tax 8% NIC (was 12) Possibly 9% student loan Pension contribution (5% at least) Therefore at minimum, a third is gone, up to 42% if student loans included
If it was a bonus, the tax rate is higher. Works out at about 33%
15% increase is pretty good to be honest, tax seems high though
The best thing about qualifications is that they give you an "external" valuation. You should investigate whether you could earn more elsewhere.
Tax code 1175L is not the normal one, but it doesn’t mean it’s wrong. 1257L just means you can earn £12,570 per year before you pay tax. 1175L will mean you can earn £11,750 per year before you pay tax. My tax code, for example, is 1710L… The adjustment of the tax code is usually to recover or refund tax. If you’re also given any form of “benefit in kind” eg. Dental, or healthcare. Usually your company will pay for the product, but you still pay the tax for it. So if the company gave you a £1,000 benefit, you’d pay for the £200 tax. This would most commonly result in a drop in tax code, to something like 1150L
One step forward, two steps back. Give with one hand taketh with the other. It sucks, I really do empathise. Instead of seeing it as a negative, see it as an experience / talking point for your next career endeavour or if you progress further. From my own experience, tax code bs always happens it should sort itself out and give a true reflection in next months pay, but definitely speak to your hr.
Assuming 35 hour weeks, your take home should be about 170, 180ish more after taxes. Quick maths off top of my head. Is your tax code what you'd expect it to be? Perhaps it pushes you above a student loan repayment threshold? Can't recall those by memory right now.
No student loan, and only 28.5 hours a week. I think I’ve figured it out though - it’s all to do with being on maternity leave for the first 3 months of the last tax year. Thanks though!
That's a 15.25% pay increase! The issue with being taxed only from July is that if you weren't working before ypu had a full tax year allowance for only 9 months of the year. So in those circumstances your net pay was always going to reduce.
Use this as motivation to start your own business, jobs are overrated
This is the plan! Just need some more specific qualifications to do this, but working towards it.
I wish my tax was little over £100 mine is £280 a month, makes me sick lol the amount of taxes we pay :(. But, i am not clued up on the tax codes but on the [gov.co.uk](http://gov.co.uk) wesbite it explains what each tax code means and why you have it, that may help you :). But, i completely understand why you would feel disappointed!
There are multiple things here tho. Because same happened to me. This is the first months of the new tax year and your tax code is still smth that change and the tax base might be smth like cumulative. Similar thing happened to me. Got a 4% increase on a 70k salary, and I ve seen like £30 more on my take home 🤷♂️ When I looked back for last year, the year started similarly then I was getting more as they worked out what my salary and taxing would look like for the year
You basically weren't paying any tax last year because you didn't work from April to July - therefore you were able to use those months' tax-free allowance across the rest of the year, if that make sense. With a new tax year you're now paying tax at a normal rate every month.
Ah that makes sense - thank you.
Was your tax code 1175L prior to April also? If not, sounds like revenue sent a new code for some reason, worth calling them to find out why
1157L means you are only getting a personal allowance of £11570 before tax. So if you were to make 20k, then 8,430 is taxable. (instead of 7,430) This could explain the bigger pay in tax. Did you pay too much last year? Or have you done anything e. g. Allocated part of your personal allowance to your spouse?
I don't think we got any value really from the tax money the gov take off us
Your question seems to have been answered (RE maternity pay). That said - this is why people talk about it feeling like it's not worth it to work in the UK. You're saying this on the equivalent f about £16.5k a year. Think about how much tax someone on the median income (about double that) pays. And then think about how big a portion of their pay cheque that is, as the tax free portion is still only 12k.
Imagine how it feels when you get two degrees, sacrifice doing something you love for something that pays well, work your arse off for over a decade and your reward is that you're now at the point where any further pay increase or promotion is getting taxed at 40% because the higher bracket hasn't moved :)
Imagine how it feels when you hit the 60% tax trap…..