I amended my tax bands and bandwidths on Sage Payroll after April and think I may have got it wrong! Tax deductions are really low and I thought it was just adjusting for previous over-payments, however checking on HMRC I think I may have input them wrong and now I think I may have to make big deductions from employees. My payroll screen is as attached. I followed what looked right according to legislation (ie the allowance up to £7475 at 0% then 20% from there up to £35k. How can this not be right???? Hoping someone can help.
Oops, no, you're confusing the single persons tax allowances with the tax bandings for taxable income. The bands should be entered as following
£0 to £35,000 at 20% (basic rate) £35,001 to £150,000 at 40% (higher rate) £150,001 + at 50% (additional rate)
The single persons tax allowance is £7475 (tax code 747L) which is apportioned over the year and deducted from taxable pay before the above rates are applied. I think you'll need to recalculate past periods. Good luck
Amanda
-- Edited by esPAYonline on Tuesday 5th of July 2011 01:38:00 PM
Amanda - thank you so much for clarifying. It all made sense as far as the bands go but the numbers were starting to look really odd. i thought i'd been doing it wrong for the last 4 years, but turns out only since i 'corrected' it 2 months ago. Thanks again.
