What to do when you think HMRC have made a mistake?

dex91

Hi, I'm a student who got his first job during the summer. During this time, I earned over just over £3000 but certainly not over my personal limit. I got a letter from HMRC 2 weeks ago saying my tax code had changed, and they had informed my past employers. According to them I've earned around £5500 and now I'm paying 20% tax on my interest, I think. I'm not sure why they would call my employers as I finished working there in early October. Anyway, they have definitely made a mistake with my earnings as my summer job was my first ever job and the only other finance I got this year was EMA which certainly doesnt account for £2k. Is there a quick fix to this such as a form I could fill out, or do I have to call them up? thanks

fengirl_2

I have never heard of an HMRC form where they tell you what you have earned during the tax year! Are you sure this is not your P45? Have you had a P45 from your old employer as this sounds as if HMRC have not been informed you have left them? Need more info really.

dex91

No, it's not a P45. It was a letter telling me that I was close to going over my personal limit (around £6k). My work situation is a bit complicated, I finished there in October but I wasn't officially made redundant. I was told that I'd be contacted if I was needed which hasn't happened yet. So, I dont think I need a P45 just yet, or maybe I should just quit and get my P45 to sort this mess out. Do you think that could be the problem? The HMRC still think I'm working there and getting paid for it?

fengirl_2

OK, now I understand.
HMRC have been notified that you have started work for the first time. The letter they have sent is to remind you that you are being paid bank interest gross and that you need to review the situation if your bank interest plus wages this tax year goes over the tax free allowance of £6475. HMRC do not know how much you have earned this year until your employer issues a P45.
Therefore, if you are sure you are not going over the tax free limit this tax year, you can just ignore the letter. If you think you will go over the limit, yu need to inform your bank so that they can deduct tax from your interest.

dex91

Thanks for the quick reply.

That's the problem though, the amount HMRC have said I have earned is wrong. Do I not need to contact them so they can change my tax code back to what it was? Or does the tax code revert back to what it was when the new tax year begins?

fengirl_2

I dont see how HMRC can know how much you have earned this year as they dont have access to your employer's records and would only know this when your employer issues a P45.
I now assume that you have had a notice of coding. How is this made up?

dex91

Thanks for helping with the issue.

I dug out the letter and I've got some additional information that could help with the problem. I have two letters that are both entitled PAYE Coding notice. In the first letter, it is referring to the change of tax code so that my current employers can figure out how much tax to take off the payments they give me. My new tax code for that is 551T. They worked this out using the following info - balance of tax allowances = £5515 and a tax free amount of £5515. They then go on to say how much more I can receive off my employers and for how long, before my wages taxed. In the second letter, it is referring to insurance payments I'm receiving from Pearl (which i get until I'm 25). My new tax code here, has changed from 647L to 96L. They worked this out using the following information - personal allowance = £6470, other earnings or pension = -£5515 and a tax free amount of £960. It then goes on to say how much ££ I can receive before my payments are taxed. My main question here is what does this all mean? Where is the £5515 coming from as my Pearl payments and wages do not amount to that and do my SAAS payments come into this at all? Thanks again for all your help