Hello Sir,
In the following example i dont understand that why unpaid tax of £58 has been grossed up?
Adrian is a 40 year old single man (suffix letter L) who earns £15,000 pa. He has benefits of £560 and his
unpaid tax for 2008/09 was £58. Adrian is entitled to a tax free personal allowance of £8105 in 2012/13
Adrian is a basic rate taxpayer.
What is Adrian's PAYE code for 2012/13?
Personal allowance 8105
Benefits (560)
Unpaid tax £58 × 100/20 (290)
Available allowances 7255
Adrian's PAYE code is 725L
thank you
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example on employee paye code in bpp study text
Adrian's Personal Allowance, representing his tax free income, forms the basis of his PAYE coding and is being reduced in respect of his assessable benefits and underpaid tax from earlier years - hence 8105 - (560 + 290) = 7255.
As Adrian is a basic rate taxpayer (20%) the amount of INCOME to be assessed to collect £58 of tax is 290 (58 x 100/20)
ie 290 x 20% = 58.
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