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Quite a similar thread to others I've seen here - hope I'm not repeating the same questions again!

I just got my first payslip after arriving in the UK and noticed that the tax is far higher than the HMRC rate for my salary bracket.

I did some research but couldn't find any reason why I would be taxed at 24.23% of my gross this month AND then an additional amount for NI.

I have about £640 back pay from April that is only being paid now,but even so, it doesn't explain the rather large discrepancy between the HMRC rate and what I'm seeing here.

Any ideas?

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  • What's the tax code on your payslip?
    – GS - Apologise to Monica ♦
    May 27, 2016 at 7:10
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    It's M1... Could it be that it's higher due to it still being on the emergency tax number...?
    – Rowan
    May 27, 2016 at 8:10
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    Have you asked either the payroll department, HR, or your immediate supervisor? One of them should be able to tell you why you were placed in the tax bracket you were, and what you might need to do to change that.
    – user
    May 27, 2016 at 9:02
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    @Rowan yes, M1 is the emergency tax code, and weird things can happen. As Michael says, speak to your employer's HR or finance department - indeed, they may already be sorting it out. Any overpayment should hopefully be balanced out in future payslips once you have the correct code issued.
    – Andrew
    May 27, 2016 at 9:29

2 Answers 2

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The back pay will explain the high rate.

You are being taxed on a month one basis. HMRC says

W1 (week 1) and M1 (month 1) are emergency tax codes. This means your tax is based only on what you are paid in the current pay period, not the whole year. These codes are sometimes known as ‘non-cumulative’.

Thus the tax is calculated as if you were getting the amount you got this month for every month in the year. So compare 12 times the amount with the tax allowances to see where you get taxed at the higher rate. (or divide the allowances by 12)

When your records have been consolidated the emergency code is removed and the amount you pay will be adjusted to the correct level and this will include a refund if necessary

Doing a calculation at annual rates Gross salary of £68,500
first £11,000 at 0
next £32,000 at 20 % = £6,400
next £25,500 at 40% = £10,200

So net tax of £16,600 a rate of 24.23%

So you received about £5,708 in one month

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Just to expand on the other answer, which explains the effect of the M1 tax code very clearly, on why you have this tax code.

As this is your first job in the UK this tax year, you shouldn't be on an emergency code at all. Your employer should have gone through a "PAYE starter checklist" (a previous incarnation of this was called a "P46") in plenty of time before your first payslip. This in turn should have led to you being allocated a normal tax code that would make the PAYE calculation take account of you not receiving any pay in April. You should chase up your employer to get this corrected as soon as possible.

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  • Reading the starter checklist I notice the question about previous status talks about a "job" not about a "job in the UK".
    – Peter Green
    May 29, 2016 at 1:27
  • @PeterGreen good point, though in the specific circumstances I suspect it's still unlikely the OP has worked anywhere else since 6th April.
    – GS - Apologise to Monica ♦
    May 29, 2016 at 6:38

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