I just run my second payroll and both times tax came up negative. Why? After the first I had a new tax code issued by HMRC because they detected my underpaying my taxes.

rpm1602-gmail-co · ‎August 28, 2024

I had two employments with high salaries this year. Now I'm on £1048 monthly salary. What I don't understand is why my employer pays me more this tax year, where I overpaid taxes as I can see. Why is it not HMRC who refunds me next tax year by increasing tax free allowance for example? What to expect next? Is it something I need to configure in quickbooks?

John C · ‎August 28, 2024

Hi rpm1602-gmail-co QuickBooks will calculate the amount of tax due on the details entered. If you have previously been receiving a high salary with the relevant tax deductions, you've entered those year to date figures into the system and now you're receiving a smaller salary you're likely to receive a tax refund/a negative amount/increasing the amount of wage you're receiving. The amounts can be checked by using the HMRC PAYE calculator: https://intuit.me/3Xj9R7U. As you've contacted HMRC, they have confirmed your new allowance/tax code, which can be entered into the system, the tax will be calculated accordingly, again, you can check this by using the PAYE calculator.

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ShangY · ‎August 28, 2024

Hello, rpm1602.

To ensure that I provide the correct resolution for your concern with your payroll taxes in QuickBooks Online (QBO), I have a few questions that I need to confirm. First, could you please provide the specific tax code issued and the payroll service you are using? Also, let me know if you are set up as an employee or director of the company.

Additionally, here's a guide for detailed instructions to help you maximize the benefits of your QBO payroll subscriptions:

Looking forward to hearing from you soon. Have a good one.

rpm1602-gmail-co · ‎August 28, 2024

I'm both employee and a director, set up as a director in the Standard QBO Payroll, with an "alternative" director calculation method. Tax calculation method is "Cumulative". After first payroll with negative tax amount I got issued "1040L Week 1/Month 1" tax code. Then I had a call with HMRC explaining the situation and checking how much tax already paid this tax year and expected income this year and we have changed tax code to "1257L".

John C · ‎August 28, 2024

Hi rpm1602-gmail-co QuickBooks will calculate the amount of tax due on the details entered. If you have previously been receiving a high salary with the relevant tax deductions, you've entered those year to date figures into the system and now you're receiving a smaller salary you're likely to receive a tax refund/a negative amount/increasing the amount of wage you're receiving. The amounts can be checked by using the HMRC PAYE calculator: https://intuit.me/3Xj9R7U. As you've contacted HMRC, they have confirmed your new allowance/tax code, which can be entered into the system, the tax will be calculated accordingly, again, you can check this by using the PAYE calculator.

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I just run my second payroll and both times tax came up negative. Why? After the first I had a new tax code issued by HMRC because they detected my underpaying my taxes.