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Hi there Im hoping you can help me.because I now earn over…

Hi there I'm hoping you can...
Hi there
I'm hoping you can help me.because I now earn over £100,000 per year my payroll dept has advised me to apply for an OT tax code,can you tell me what this is and if I would benefit from it financially
Thanks
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4/9/2013
Sam
Sam, Accountant
Category: UK Tax
Satisfied Customers: 14,353
Experience: 26 HMRC expertise, PAYE, Self Assessment ,Residency, Capital Gains, CIS ask for Sam Tax
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Hi

 

Thanks for your question

 

The reason your payroll have advised this, as once your income exceeds an annual amount of £100,000 then you start to lose entitlement to personal allowances (and at the annual salary of £118,880 you lose them completely, as for every £2 you are over £100,000 you lose £1 of your personal allowance entitlement)

 

Code OT removes all personal allowances, at the same time of ensuring that you pay tax at the correct rates (so in your case the first £34,370 at 20% and 40% on anything above this amount)

 

Now it may be that you do not need to have all your allowances taken, if your annual increase is less than £118,880 but certainly some amendment is needed for your tax code, and your employer is offering you advise (Over and above their obligations) to ensure you do not end up owing tax after 05/04/2014.

 

So do give HMRC a ring and give them your new annual salary figure, so the necessary adjustment can be made.

 

If you could rate the level of service provided, it would be appreciated, as this ensures I am paid and any feedback and bonus are always most welcome.


Thanks

 

Sam

Sam
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Customer reply replied 5 years ago
Just to say thanks for the explanation.i fully understand now.
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