If you observe differences in tax deducted for two periods with the same gross pay, slight variations can occur due to the software calculating based on year-to-date (YTD) figures, normalising over time. This can also occur if the tax code has changed for an employee.

If you are new to BrightPay and comparing like for like pay periods with your current software and notice differences in the tax being deducted, please check that the following is complete / set up in BrightPay:

• Mid-year totals have been added for each employee (Pay to date (inclusive of free pay) and tax paid to date fields are particularly important for tax calculations).
• Pension is set up the same, ie tax relief at source, net pay arrangement or salary sacrifice are being used in both softwares.
• Any other salary sacrifice elements such as child care vouchers, EV cars are also the same.
• Payrolled benefits have been entered into the employee's record and are showing on the payroll.
• Same tax code is being used.

Note: If no tax is being deducted at all, the issue is usually that the Mid-year totals have not been fully completed, causing the employee to have the full personal allowance again.

Q. Why is there a 20p alternating difference increase then decrease in PAYE tax due for my employee?

A. Depending on the salary and the tax code, it can happen where a tax amount can fluctuate slightly from month to month - it is usually 20p up and down each month (or 19p in the case of a Scottish tax code as the lowest rate of tax is 19%)
 
It is due to the YTD being re-calculated each period, so when you factor in the roundings used to apply tax, sometimes this means that there is more tax (19p or 20p) due in one period and in the next period there is less.
 
Example on 1256L tax code ; Monthly salary £1048 gross

M1 YTD £1048. Tax free allowance on 1256L tax code is £1047.42 - as there is less than £1 taxable remaining - no tax is due.

M2 YTD £2096. Tax free allowance on 1256L tax code is £2094.84 for month 2.
£2096 - 2094.84 = £1.16 taxable income. 

(Drop the pence for tax calculation purposes) £1 x 20% (Basic tax rate) = 0.20 tax due for month 2

The above example shows how some salaries & tax code combinations mean that with the same salary, the tax due can alternate up and down by the amount of the basic tax rate (19p for Scotland, 20p for rest of the UK).