Tax Question

hummy

Hi Quick tax related question, which i am unsure of.

Back in August i was made redundant from the company i was working in. As part of the redundancy package i was told that i would be receiving the company bonus that is given to all employees in December. When i left in August i was issued with a P45 and have submitted that to my new employer when i joined in October.

The company bonus has been given now, and from that a tax deduction was made. The bonus was for about £2200 from which £450 was taken in Tax using the BR tax code. They have issued another P45 for this.

1. My question is, is there a case for overpaid tax here and therefore would i be eligible for a refund.
2. Do i need to give this new P45 to my current employer, since i am already on their payroll on the correct tax code?

Thanks in advance.

ceeforcat

1. No - tax allowances should be correct in new job if you handed in P45 - old employer has adopted correct procedure.

2. Definitely not - do you really want BR code to be applied to all of your earnings?

nesco

good news.
There may be case of overpaid tax as tax code changed in 06.october.2008
tax code changed from 543L to 603L means you have another £600 tax free allowance

chrisbur

Your new employer will almost certainly have adjusted your tax code to give you the £600 extra tax allowance. Your code should be 603L plus or minus any additional allowances or adjustments you have.
Your old employer was correct in taxing this at BR but they should not have issued another P45. From page 15 of
http://www.hmrc.gov.uk/guidance/cwg2.pdf

"In such cases, you should provide the employee with a letter giving the following details:

• the date of the payment(s)
• the gross amount of each payment
• the amount of PAYE deducted from each payment.

You must not give the employee another form P45. "

If you are paying any tax at 40% or would be due to pay it at the end of the year if this bonus was added to your other wages then you will be under taxed.
The other thing that might affect your tax is if you had any adjustments to your code in your old job that might no longer apply, for example an adjustment for free membership of a medical scheme, and you have not told the tax office that they are still in your code.