BR code Help pls!

Kaybenson

My Pal was sacked by her employer few months ago. She's back to work though taken as completely new employer.

She was paid last week but on emergency code (i.e BR!). She gave them P45, P60 etc so that she can be taxed normally.

She has given the employer the P45 again. What can she do to the money she lost due to overtaxing? Does she deal with Tax office directly?

Pls help!!!!!!

molerat

Assuming the P45 was from this tax year when the employer starts using the details from the P45 the tax will correct itself and she will receive the overpaid tax in her pay.

Chris_Tax

HMRC is likely to be a waste of time for you. It seems from what you say to be administrative failure on the new employer's part.

First things first. Check to ensure that your friend did actually provide the new employer with form P45 from the old employer.

The new employer is obliged to operate the tax code it has been given via the P45.

The other scenario is your friend could be mixing up the payroll forms. S/he may have been given form P46 by the new employer (which is the form employee's without a P45 will sign on accepting new employment). If the "I've had another job since 6 April" box has been ticked here, code BR will apply. Again, the employer does not have a choice here and is legally obliged to operate BR in this circumstance until told otherwise by HMRC.

In respect of the overtaxing to date, the Employer's software should calculate a correction once the correct tax code is applied. Do check that this is done.

Note though that if your friend can convince the employer to re-run their payroll (their error!) with the correct code and pay over the difference, this will provide absolute certainty re paying the correct tax (no reliance on fiddly calculations to double check software!). As a handy by-product your friend's payslip net income will be stable rather than slightly erratic; handy so as not to need to explain anything in future for rent/landlords/mortgage/etc. etc.

If your friend's tax code was not 647L or 747L on form P45, you may well need a bit more advice, in which case, please ask.

Kaybenson

molerat wrote: »

Assuming the P45 was from this tax year when the employer starts using the details from the P45 the tax will correct itself and she will receive the overpaid tax in her pay.

The P45 was for last january which means last tax year.

What do you suggest?

Chris_Tax

Kaybenson wrote: »

The P45 was for last january which means last tax year.

What do you suggest?

Two things could have happened, which should have had the same result:

Either

• Employer takes the P45, sees a 647L code for 2010/11 and applies a 747L code for 2011/12 (from 6/4/2011) to reflect new Personal Allowance:

• Employer requests a P46 is completed, in which case "This Is my First Job since April" should have been ticked, therefore 747L code applied.

From what you say, code BR should not apply.

Kaybenson

Cheers

This is her her last details as copied from her last pay slip befre she has to leave the job last January:
Tax code: 647L
Taxable: £17811.31
Tax: £2374.40
National insurance: £1383.29

1) Its like the guys in the finance did NOT see the photocopy of her P45(even though she's been reinstated into the same job!)

2) She has told them. They promised to sort it out but we dont know how!

3) She just want to know if the overcharged money can be recovered. Secondly she was fearful that they might still make the same mistake later this month.

@Chris

4) It appears you a expert in this tax stuff, looking at herlast payment (last tax year), does she deserve a tax rebate?

Cheers

Chris_Tax

Kaybenson wrote: »

Cheers

This is her her last details as copied from her last pay slip befre she has to leave the job last January:
Tax code: 647L
Taxable: £17811.31
Tax: £2374.40
National insurance: £1383.29

1) Its like the guys in the finance did NOT see the photocopy of her P45(even though she's been reinstated into the same job!)

2) She has told them. They promised to sort it out but we dont know how!

3) She just want to know if the overcharged money can be recovered. Secondly she was fearful that they might still make the same mistake later this month.

@Chris

4) It appears you a expert in this tax stuff, looking at herlast payment (last tax year), does she deserve a tax rebate?

Cheers

I'm not 100% sure which is the correct method to apply by employer (i.e. use P45 647L and then apply 747L for 2011/12 or request a P46). However, I am 100% sure whichever method was applied, assuming correct P46 box ticked, would result in a 747L code - not BR.

It's often the case payrolls are run externally. It may just be a timing delay in providing the payroll processor with the info.

Do push the issue though. They are wrong. It is not for HMRC to correct either.

If the P45 is an issue, offer to sign a P46.

Re this years tax, the software should correct the position unless W1 M1 basis is applied (I think this generally shows on payslips). You'll know if this has been done as you'll have a blip of increased net income on payslip, and then a reduction to a standard recurring level (assuming standard hours!)

Also, yes, your friend is due a tax rebate of £107.14, as follows:

Gross 17,811.31
(Less PA) (6,475.00)
Taxable 11,336.31


Tax at 20% £2,267.26
(Tax paid) £2,374.40

(Overpaid) (£107.14)

Please don't try to apply this calculation to NIC - that is a different beast.

Don't count on HMRC to tell about this refund though. They'll happily keep quiet.

The easiest way to correct this would be to initially phone and see what is said; they may amend the tax code (note employer can't do this without notice from HMRC).

Failing that, apply to complete an SA Return for 2010/11 and this will be corrected.

I wouldn't advise using an accountant though, you'll get charged more than £100 no doubt so it would be a pointless excercise for you.

chrismac1

The clock starts ticking again every 6 April. If your friend' starting date was after 6 April, she should have completed a P46. She should have ticked the first box on theis form, box A - or given the information on that box - to say "This is the first job I have had since 6 April". Tax code 747L will then result.

This is where a decent payroll department is worth their salt. An "entry level" payroll person just wants a P46 with some sort of box ticked, not bothered if it is the right one. The best payroll people will discuss the form with new staff - especially where box C is being applied to give a BR code - to make sure the person is on the right code. After all, box C is saying she has another job, if this job is a full-time one and she has ticked the correct box doesn't that have a potential impact on the employer? Can she handle two jobs at once? of course the "entry level" person doesn't give a stuff about this, just wants a box ticked.

chrisbur

"Its like the guys in the finance did NOT see the photocopy of her P45"
"She has given the employer the P45 again"

These quotes from a couple of your posts suggest that the original P45 was not handed in. Was a P46 completed and if so which box A, B or C was selected?

If all three original parts of the P45 were not handed in or a P46 completed with either Box A or B selected then BR code should be used.

You say that she gave them a P60 this cannot be used in any way to affect tax for this year. It suggests though, if the P60 was from last year, that there was taxable income (employment or taxable benefit) after the job that she was sacked from. If this is the case that will affect the details regarding a refund for last year. To work out any refund due these figures will need to be added to the ones you gave.

Kaybenson

chrisbur wrote: »

1) These quotes from a couple of your posts suggest that the original P45 was not handed in. Was a P46 completed and if so which box A, B or C was selected?

2) If all three original parts of the P45 were not handed in or a P46 completed with either Box A or B selected then BR code should be used.

3) after the job that she was sacked from. If this is the case that will affect the details regarding a refund for last year. To work out any refund due these figures will need to be added to the ones you gave.

1 & 2

She just told me that she did NOT fill any new tax documents(P45 or 46). She was reinstated into the same job where she was kicked out few months ago. She gave them P60 & P45.

[Deleted User]

Kaybenson wrote: »

1 & 2

She just told me that she did NOT fill any new tax documents(P45 or 46). She was reinstated into the same job where she was kicked out few months ago. She gave them P60 & P45.

P60 = No use to Employer.
P45 = Out of date

Regardless of the fact the employee has been reinstated this is a new employment from a payroll point of view and the correct thing to do is complete a P46.

Employers now have to submit a tax document IMMEDIATELY via the internet, in the absence of such document since April 2011 code OT should be applied, but it used to be BR, so if the Employer is not up to date this could be why BR was used. (OT is now used to stop people who should pay 40% being undercharged, due to last HMRC fiasco, not really relevant in this case OT would act the same as BR)

The employee needs to download a P46 from the internet fill it in and give to employer.