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Where Taxpayers and Advisers Meet

Gross Pay Less Than Taxable Pay

CG
Posts: 177
Joined: Wed Aug 06, 2008 3:33 pm

Gross Pay Less Than Taxable Pay

Postby CG » Tue Jan 12, 2016 11:16 am

Hi

Why would Gross Pay be Less than Taxable Pay?

Thanks for any help with this.

section 44
Posts: 4468
Joined: Thu Oct 30, 2008 12:47 pm

Re: Gross Pay Less Than Taxable Pay

Postby section 44 » Tue Jan 12, 2016 11:22 am

Taxable benefits?

CG
Posts: 177
Joined: Wed Aug 06, 2008 3:33 pm

Re: Gross Pay Less Than Taxable Pay

Postby CG » Tue Jan 12, 2016 11:25 am

But would that be written on the payslip? Aren't benefits declared via P11D?

section 44
Posts: 4468
Joined: Thu Oct 30, 2008 12:47 pm

Re: Gross Pay Less Than Taxable Pay

Postby section 44 » Tue Jan 12, 2016 11:38 am

Presumably either taxable income includes something other than "pay" (e.g. benefits, bonus etc) or "gross pay" is something of an artificial figure (e.g. like a notional salary where there is salary sacrifice for certain other benefits)

bd6759
Posts: 3094
Joined: Sat Feb 01, 2014 3:26 pm

Re: Gross Pay Less Than Taxable Pay

Postby bd6759 » Wed Jan 13, 2016 12:14 am

If you are on a "K" tax code, an amount is added to your gross to arrive at the taxable figure.

section 44
Posts: 4468
Joined: Thu Oct 30, 2008 12:47 pm

Re: Gross Pay Less Than Taxable Pay

Postby section 44 » Wed Jan 13, 2016 10:15 am

A tax code (including a K-code) only determines how much tax an employer has to deduct from your salary under PAYE.

It doesn't affect your salary/taxable income from that employment, albeit that in arriving at a K-code amount, HMRC would include those other liabilities

bd6759
Posts: 3094
Joined: Sat Feb 01, 2014 3:26 pm

Re: Gross Pay Less Than Taxable Pay

Postby bd6759 » Wed Jan 13, 2016 6:28 pm

A tax code (including a K-code) only determines how much tax an employer has to deduct from your salary under PAYE.

It doesn't affect your salary/taxable income from that employment, albeit that in arriving at a K-code amount, HMRC would include those other liabilities
A tax code does not determine how much tax is to be deducted. It simply determines the amount of taxable pay. An ordinary code results in a reduction to the gross pay to arrive at the taxable pay. A K Code results in an increase to the gross pay to arrive at the taxable pay. So, looking at a PAYE calculation, the taxable pay would be more than the gross pay.

section 44
Posts: 4468
Joined: Thu Oct 30, 2008 12:47 pm

Re: Gross Pay Less Than Taxable Pay

Postby section 44 » Wed Jan 13, 2016 6:39 pm

No.

From HMRC's website:

"Your tax code is used by your employer or pension provider to work out how much Income Tax to take from your pay or pension."

Link: https://www.gov.uk/tax-codes

So as I said:
A tax code (including a K-code) only determines how much tax an employer has to deduct from your salary under PAYE.

robbob
Posts: 2816
Joined: Wed Aug 06, 2008 4:01 pm

Re: Gross Pay Less Than Taxable Pay

Postby robbob » Wed Jan 13, 2016 6:42 pm

bd6759
An ordinary code results in a reduction to the gross pay to arrive at the taxable pay. A K Code results in an increase to the gross pay to arrive at the taxable pay.
I would disagree with this statement (unless i am misunderstanding the context it is posted in - apologies if this is the case)

A tax code change never normally changes taxable pay amount as shown on the payslip - a tax code change only alters the "fee pay" column of the P11 calculations (and thereafter the tax deducted) - this bit is normally hidden behind the scenes and wont show up on the payslip so a tax code change will not be the reason for the difference between Gross Pay and Taxable Pay - unless something non standard is going on.

section 44
Posts: 4468
Joined: Thu Oct 30, 2008 12:47 pm

Re: Gross Pay Less Than Taxable Pay

Postby section 44 » Wed Jan 13, 2016 6:52 pm

... I suppose an employer might use tax tables when applying a particular tax code to determine how much tax he has to deduct from your wages under PAYE, or summat, perhaps


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