For employees that are on Pay as you earn (PAYE) it is easy to think that they are automatically on the correct tax code, and paying the correct tax, however this is not always the case.
The standard tax code for the 2017/18 tax year is 1150L which gives individuals a tax free allowance of £11,500 per year before they pay tax, but this would not be correct for all employees.
Below are a few examples of additional tax that employees with no other income may still need to pay, and links to relevant websites to help you check if these apply to you.
Taxable Benefits:
Receiving taxable benefits such as a Company car or private health insurance will mean additional tax will be due on the taxable value of the benefit that you receive. This is often done through the payroll, with a change to your tax code.
HMRC are notified of taxable benefits through the P11d that an employer submits each year, and often your tax code is adjusted accordingly. Sometimes HMRC will make an assumption on the value of your taxable benefits in advance, based on previous years submissions, and then adjust once the P11d’s have been submitted, which could mean you Tax code is incorrect. Also if you take on new benefits during the year you may be undertaxed if HMRC have not been informed.
The below links provides more details on tax due on benefits.
https://www.gov.uk/tax-company-benefits/overview
Child Benefit:
If you have an individual income over £50,000 and either you or your partner are claiming Child benefit you may be liable for a tax charge known as ‘High Income Child Benefit Charge’.
Check on the link below to see the additional tax that may be due.
https://www.gov.uk/child-benefit-tax-calculator
Income over £100,000:
Your Personal Allowance goes down by £1.00 for every £2.00 that your adjusted net income is above £100,000. If this is applicable to you, you will need to complete a Self-Assessment Tax return each year.
Tax codes are often incorrect for tax payers earning over £100,000 and they are incorrectly given a full personal allowance, only to find out later they have a nasty shock of an unbudgeted tax bill!
https://www.gov.uk/income-tax-rates/income-over-100000
Contact us
Contact the payroll team by completing the form on our website. Alternatively you can call us on 020 8977 3559 at our Hampton Wick office to speak to an adviser.
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