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Question about tax code
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I can't seem to retrieve my money supermarket sign in details, so going to try here and see if anyone can help!
I am full time employed in the health sector. We have a weekend clinic where on my team, there aren't enough staff to cover this as part of our regular working hours. All other staff groups get the time back somewhere in the week; on mine we get extra pay on top. This is how it was worked out to appeal to us to work where they wouldn't have cover otherwise, and having one person from my group in session is essential. It amounts to four hours on a Saturday, once per month.
A few months ago, the way they paid us was changed. We used to get the extra pay as overtime, but to bring costs down they changed it to us being paid as staff bank.
I have always been okay doing the shift as the money was okay, even though it meant a six day work week, so like my colleagues, have done it like this for a few years now. Today I received my payslip for the last session I did, and I was shocked at how much I was paid - £35 for four hours work. This is less than half what my take home used to be. It's important to note that the pay used to come all together in your main payslip, this is the first time it came in a separate slip. This is a DO tax code, where my main is BR. I called payroll, who said these codes are correct. I'm told the extra pay is considered a second job, therefore I am being taxed at 40%. This is because my personal allowance is taken from my main pay, so the 'second job' tax code applies. I looked online at the HMRC codes and that is exactly what it says.
I spoke to my manager and said it's really not worth the 1.5-2 hour commute on weekend each way to come in if I am going to get heavily penalized by the tax system. I would rather have the time back in the week, which as I said before is impossible. So, we are at an impasse for now, I said I wanted to look into some details before I decide what to do. Keep in mind this isn't just about the pay, it's also that my Friday night is out as I can't / won't go out with friends or do anything that requires me staying up late, the commute can be up to four hours on top of the four hours of work, so it also takes away most of my Saturday, essentially it's eating in to my personal time, all for £35 which is not worth it for me.
I'm pretty certain I can't required to work extra if I don't want to, so not really asking about that. However, is there any way I can take this forward with my employer itself to get off the higher tax bracket? I don't want this classified as a second job, it is my same job, just on top of my main one. I should also add, with the combination of both of these salaries when taken together, it takes me very close to the 40% bracket anyway, so I also want to make sure I am not shooting myself in the foot by asking this, then ending up in the next bracket for all my wages and being paid less. I hope this makes sense, really hoping someone who knows the tax system can help. Thank you in advance.
I am full time employed in the health sector. We have a weekend clinic where on my team, there aren't enough staff to cover this as part of our regular working hours. All other staff groups get the time back somewhere in the week; on mine we get extra pay on top. This is how it was worked out to appeal to us to work where they wouldn't have cover otherwise, and having one person from my group in session is essential. It amounts to four hours on a Saturday, once per month.
A few months ago, the way they paid us was changed. We used to get the extra pay as overtime, but to bring costs down they changed it to us being paid as staff bank.
I have always been okay doing the shift as the money was okay, even though it meant a six day work week, so like my colleagues, have done it like this for a few years now. Today I received my payslip for the last session I did, and I was shocked at how much I was paid - £35 for four hours work. This is less than half what my take home used to be. It's important to note that the pay used to come all together in your main payslip, this is the first time it came in a separate slip. This is a DO tax code, where my main is BR. I called payroll, who said these codes are correct. I'm told the extra pay is considered a second job, therefore I am being taxed at 40%. This is because my personal allowance is taken from my main pay, so the 'second job' tax code applies. I looked online at the HMRC codes and that is exactly what it says.
I spoke to my manager and said it's really not worth the 1.5-2 hour commute on weekend each way to come in if I am going to get heavily penalized by the tax system. I would rather have the time back in the week, which as I said before is impossible. So, we are at an impasse for now, I said I wanted to look into some details before I decide what to do. Keep in mind this isn't just about the pay, it's also that my Friday night is out as I can't / won't go out with friends or do anything that requires me staying up late, the commute can be up to four hours on top of the four hours of work, so it also takes away most of my Saturday, essentially it's eating in to my personal time, all for £35 which is not worth it for me.
I'm pretty certain I can't required to work extra if I don't want to, so not really asking about that. However, is there any way I can take this forward with my employer itself to get off the higher tax bracket? I don't want this classified as a second job, it is my same job, just on top of my main one. I should also add, with the combination of both of these salaries when taken together, it takes me very close to the 40% bracket anyway, so I also want to make sure I am not shooting myself in the foot by asking this, then ending up in the next bracket for all my wages and being paid less. I hope this makes sense, really hoping someone who knows the tax system can help. Thank you in advance.
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I believe so. I certainly don't want to fully move into the 40% bracket as it means my monthly take home will go down and I can't afford any more salary loss (took a £5000 reduction a year ago). I am thinking I may have to find someone legal to ask these questions to. It's spelled out on the HMRC website, although not as though I seem to have understood it further by reading quite a lot over there today!
I suppose this is true. Last year I got back £135 per month for about six months of overpaid tax when my salary went down due to a contract ending. This year I can't seem to get a leg up, prices on everything go up, no major change in monthly spend, yet seem to have less and less all the time . . . (same story for most people)
Income tax doesn't work like this. You only ever pay the higher rate tax on the earnings that are above the threshold, not the whole lot. You can't get into a situation where earning a bit more ends up with you taking home less.
Of course, doing extra work that effectively is taxed at 40% (because you have used up all your 20% band in your other job) means that the effective take home rate is lower than in the first job. So you might feel that it's not worth doing the extra hours for net 60% instead of something near 80% (plus NI). But you would still end up with the same take home whichever way it's split a cross the two jobs, the only difference is which packet the tax comes out of.
They must be in the politics forum complaining about Universal Credit or the Bedroom Tax...
I did consider someone would respond with something like that! And I certainly didn't want to sound pompous by saying I can't be a*sed to work for £35. It is more that my reality is different than others so I have the luxury of not doing it if not required. And like most people, I wish I made more money! :-)
I figure if someone responded like that it was more their issue than mine...
The main thing however is that if they are now classing it as a different job did they follow appropriate guidelines. Eg TUPE ? Or have you been given a new contract ? Will they now pay mileage? So many things you could hassle them about....
The 40% tax rate doesn't apply to all of your earnings. Only the portion in the 40% band (so if the threshold is £40,000, and you earn £41,000, the extra £1000 will be taxed at 40% rate instead of 20%).
Although you may be wrongly paying the 40% tax on the extra earnings (that would make it £58 before tax, or £46 if the tax should have been at the standard rate). But if this not quite right, you will eventually be refunded.
You should contact HMRC about this for more details (ie. talk to someone on the phone).
Thank you for this. The four hours pay was £69.58 and the take home was £34.50. So that also doesn't add up as it's greater than 40% . . . It's still a lot less then I used to get.