- Original Poster
- #1
With all the talk about HMRC getting the PAYE wrong, I thought it was appropriate to do a post on how to work out if your pay and tax is correct.
Lets take 2009 / 2010 first
The tax year runs from 06/04/09 to 05/04/10.
So to work out your pay you need all payslips for this period.
For monthly paid it will generally be pay slips for April 2009 to March 2010.
Add up the gross amount on all payslips.
Add up the tax on all payslips.
Check it
If you have been in the same job all year then you would have received a P60 for the tax year.
If you have changed jobs in the tax year then you should have a P45 for that job.
Your pay and tax should add up to the same figures on your P60 or P45.
Now for the tricky part how to calculate the tax you should pay
Each person receives a personal allowance the amount you earn before you start paying any tax.
For 2009 / 2010 this is £6,475.
Take this amount from your gross salary to arrive at taxable pay.
Taxable pay = gross pay 6475
If your taxable pay is less than £37,400 then the tax is:
Taxable pay x 20% = Tax due
Is this the same as the tax paid figure that you arrived at from your payslips, P60 and P45s?
If your taxable pay is over £37,400 then the tax is:
Taxable pay £37,400 = amount of pay at higher rate tax of 40% x 40% = higher rate tax due
£37400 x 20% = basic rate tax due
Total tax = higher rate tax due + basic rate tax due
Is this the same as the tax paid figure that you arrived at from your payslips, P60 and P45s?
And that is all there is too it!
A worked example
From your pay slips the gross pay is £45,000 and tax paid is £7,930
Gross pay less personal allowance of £6,475 = £38,525 taxable pay
Taxable pay is over £37,400 so the tax is:
£38,525 £37,400 = £1,125 x 40% = £450
£37400 x 20% = £7480
Total tax due = £7,930
Tax paid £7,930 so this is correct
For 2008 / 2009
Do the same but use a personal allowance of £6,035 and instead of paying higher rate tax starting at £37,400 you pay if from £34,800.
Beware ..
The above is based upon the standard personal allowance allocated to you person.
This can be different if you have benefits in kind, have underpaid tax in previous years, are over 65 etc
The tax should be correct to within a few pounds, subject to rounding etc
If your figures do not agree or make sense then get them checked by a professional.
And to you accountants - this is a simple guide for use by non accounting professionals!
Lets take 2009 / 2010 first
The tax year runs from 06/04/09 to 05/04/10.
So to work out your pay you need all payslips for this period.
For monthly paid it will generally be pay slips for April 2009 to March 2010.
Add up the gross amount on all payslips.
Add up the tax on all payslips.
Check it
If you have been in the same job all year then you would have received a P60 for the tax year.
If you have changed jobs in the tax year then you should have a P45 for that job.
Your pay and tax should add up to the same figures on your P60 or P45.
Now for the tricky part how to calculate the tax you should pay
Each person receives a personal allowance the amount you earn before you start paying any tax.
For 2009 / 2010 this is £6,475.
Take this amount from your gross salary to arrive at taxable pay.
Taxable pay = gross pay 6475
If your taxable pay is less than £37,400 then the tax is:
Taxable pay x 20% = Tax due
Is this the same as the tax paid figure that you arrived at from your payslips, P60 and P45s?
If your taxable pay is over £37,400 then the tax is:
Taxable pay £37,400 = amount of pay at higher rate tax of 40% x 40% = higher rate tax due
£37400 x 20% = basic rate tax due
Total tax = higher rate tax due + basic rate tax due
Is this the same as the tax paid figure that you arrived at from your payslips, P60 and P45s?
And that is all there is too it!
A worked example
From your pay slips the gross pay is £45,000 and tax paid is £7,930
Gross pay less personal allowance of £6,475 = £38,525 taxable pay
Taxable pay is over £37,400 so the tax is:
£38,525 £37,400 = £1,125 x 40% = £450
£37400 x 20% = £7480
Total tax due = £7,930
Tax paid £7,930 so this is correct
For 2008 / 2009
Do the same but use a personal allowance of £6,035 and instead of paying higher rate tax starting at £37,400 you pay if from £34,800.
Beware ..
The above is based upon the standard personal allowance allocated to you person.
This can be different if you have benefits in kind, have underpaid tax in previous years, are over 65 etc
The tax should be correct to within a few pounds, subject to rounding etc
If your figures do not agree or make sense then get them checked by a professional.
And to you accountants - this is a simple guide for use by non accounting professionals!
