Income Tax calculation (curious as to small discrepancy)

[pooksahib]

Hi. My Aunt gets a monthly pension from her late husbands' employer. Bar the months before and after the annual pension increase, her payments during 2017/2018 were a constant £460.36pm.

Her Tax Code for that year was S230 (S=Scotland) (230 comes from Personal Allowance minus State Pension)

Scottish Tax Rate for 2017/18: above £11,500 up to £43,000 – 20%

Gross work pension is £527.36pm. For a year, that's £6,328.32.
Deduct the tax free element of £2,300, that leaves a taxable sum of £4028.
20% of that is £805.60 or, per month £67.13.

However, for those months where her nett has been £460.36, the tax deducted has been £67.00.

It's only 13p of a difference which suggests that something is being rounded up or down but I can't figure out what. If anyone's willing to work it out and tell me how the tax of £67.00 is arrived at, I'd be grateful. Thank you.

[robbob]

I am guessing this isn't Superman 3 type scenario at play here.

Anyway the difference goes the other way so that's good.

It's simply as you say due to rounding difference specifically the payroll software used by the pension company will legitimately be using rounding that is approved by hmrc - it may even go back to the original tables that used to be used to work out the tax - ahhhh the good old days when computers weren't available to us accountants - the young accountants here don't know how good they have things nowadays

[JRG]

For a number of years now HMRC have calculated tax on rounded down pound amounts only. As £1 at 20% is 20p, tax amounts are rounded down to the nearest multiple of 20p, so that 13p is rounded down to 0p, 26p is rounded down to 20p, etc. On my own works pension I find that some months I am taxed £xxx.20, and other months I am taxed £xxx.40, depending on my accumulative pension amount to date.

[pooksahib]

Many thanks to you both. I thought it odd that I couldn't break down my Aunt's payslip to the penny when I used to be able to do so with my own but this new 'rounding down' system explains that.