PAYE help for messed up Tax codes

Missmac84 · 18 May 2017 at 11:15AM

Hi,

So my husband has never been self employed he's always worked for someone else.

This last tax year he was made redundant in June and was out of work until October (he did not claim ESA in this period of time)
He then left that job at the end of February and started a new one mid march. His pay packet at the end of April seemed wrong so he contacted his company and they said he was in BR tax. He called HMRC who said that because they didn't have his P45 from the job in February that was the reason. He found it and gave them the details over the phone. They then said they didn't have a P60 (well the company had only just sent it - it's only the end of the tax year after all)
Anyway, HMRC said it was sorted...... until today when he's received his tax code!!

They're stating that he owes £1850 in unpaid taxes (doesn't say for which period) So as a result they have broken his tax down as follows:

Personal allowance - £11500
Job expenses - £501
Total - £12001
Less underpayment restriction - £9251
Total tax free amount - £2750

Can someone please help because everytime we phone HMRC they constantly say it is his fault......

So his code is 275L

xylophone · 18 May 2017 at 11:42AM

He had three jobs in the tax year 2016-17?

There is a P45 (and full details of any redundancy payment) for job 1, a P45 for job 2 and a P60 for job 3?

What do they show?

anniecave · 18 May 2017 at 11:52AM

Did he give a P45 from job 1 to job 2 (or does the P45 from job 2 include the cummulative pay figures from job 1 or not)?

Did he have any underpaid tax carried forward from a previous year?

Missmac84 · 18 May 2017 at 12:14PM

He's passed p45s to both new companies but after just having a new baby everything is in abbot of disarray. If needed could we get copies from the companies?

Thanks for replying x

00ec25 · 18 May 2017 at 1:01PM

you need to find his payslips from his 3 jobs and see what tax codes were used on each of them

for him to have "underpaid" tax having had 3 jobs and a period when he was not claiming any benefits (so no taxable income) he must have been on incorrect tax code for at least one of those jobs

the fact his final tax code for the year was BR, but relates to a job he had for only the final month of the tax year will not have resulted in him paying more tax than he should have done on that job, so the error must lie earlier

the obvious is job 2 gave him a full tax code and treated him as though it were his first employment that year so he got backdated allowance. When that was spotted by HMRC he would owe tax on the allowance he should not have got.

Missmac84 · 18 May 2017 at 1:31PM

If the error was to lie with job 2 - should they not be liable for paying the tax back?
As the error is theirs and not my husbands?

Missmac84 · 18 May 2017 at 1:46PM

Thanks everyone for replies so far, so I've done some digging and hope this helps with some answers??

In Jan 14 he received a tax code of 887L for the employer he was still with in June 16
In July 14 the code was then changed to 997L (again same company)
But and this is where the problem lies, all payslips were online..... apart from his last one which then bizarrely shows a tax code of 2038T/0

Fast forward to his first payslip with job number 2 of 16/17 tax year and the code is 1100L
However, 1 month later it is 1150L

So my question is, if the companies that he has worked for have used the wrong tax code - then shouldn't HMRC be chasing the company rather than penalising my husband?

Missmac84 · 18 May 2017 at 1:49PM

Sorry done some more digging as I noticed on his last company payslips the letters W1/M1 after the code which when I googled it means he was on emergency tax...... He'd have been on this code for 5 mths would this have cause the underpayment and again if so should it be the fault of that company??

00ec25 · 18 May 2017 at 4:22PM

whilst it is common in the modern world to seek to blame others, responsibility for checking tax codes rests with your husband. His employers responsibility is limited to processing the info they are given. The validity of the info is your husbands's responsibility. If you do not understand why the various codes have been issued over time then you need to sort it out with HMRC

the role of the company is to apply the tax code they are given, the company is not responsible for checking it is the "correct" code since they have no info whatsoever on the full personal circumstances of the tax payer to decide what the code should be.

Either the employee gives a code to the employer (eg: P45 form handed over) or HMRC notifies the employer through "the system". Where HMRC notifies in such manner they send a coding notice to the taxpayer so the taxpayer can check it for themselves before it hits their payslip. Naturally very few taxpayers bother to do so, and many probably bin the code notice as they don't know what it is, until they are chased for extra tax

xylophone · 18 May 2017 at 6:58PM

https://www.gov.uk/tax-overpayments-and-underpayments

He wasn't on the standard personal allowance for 14/15 or 15/16 and only
for a short period in 2016-17.

Gather all the paperwork he has for those three tax years and see whether you can work out what has happened.

https://listentotaxman.com/

Above might help.

dori2o · 19 May 2017 at 12:00AM

If you check the tax codes each one of them will state that it is your own responsibility to check the code is correct and that it is being operated by your employer.

The responsibility to ensure that the right amount of tax is being collected lies with the taxpayer.

You need to ask which period this underpayment is from, and how it has arisen. If possible provide the details here.

Can you provide the breakdown of the £2038T tax code, the P45 and P60 details for 2016/17, and confirm if your husband has provided details of expenses incurred in any of the last few tax years.

There are additional allowances in the tax code 2038T of 9380. This is giving tax relief of £1876. We need to know what they are.

The latest tax code only gives additional allowances of 501 which is labelled as job expenses. Could it be possible that your husband has previously claimed expenses in a previous tax year which were then carried into the tax code for 2016/17 as an estimate assuming that his expenses would be similar year on year, but then his actual expenses were much lower than the relief he had been given?

Again, assuming that the allowance in the code is related to expenses then it would be your husbands responsibility to review his own circumstances and if he believed his expenses were going to be much less then he should have contacted HMRC by phone, post, online submission of the P87 tax relief for expenses of employment form, the personal tax account, or even by webchat, to provide a much more accurate estimate.

Only your husband would know, or have an idea of, what his expenses were going to be.

Finally, regarding the BR tax code in operation on your husbands payslip at the END of April, this has nothing to do with tax underpayments for previous tax years as any payments received after 5 April 2017 fall into the current tax year.

PAYE help for messed up Tax codes

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