Tax underpayment in current Year

purple_ronnie2011

My wife changed jobs at the start of May and her previous employer apparently didn't take enough tax of her. In her last payment from her current employer HMRC decided to take this back in one payment (Approx £300). This was not communicated, they just took of the so called underpayment. Are they able to do this in one payment without communicating. Surely she should have had the option to pay it back over a number of months? She had the right tax code during this period so not sure how the underpayment came about

CLAPTON

facts and figures would enable us to help a little more

System

If your wife gave the P45 from her last job to the new employer and they used the figures on that P45 then HMRC had nothing to do with underpaid tax being taken from her at all.

At the moment HMRC do not have access, every week or every month, to taxpayers pay, tax and national insurance figures.



Please see chrisbur's post below. Mine was misleading

chrisbur

Pam17 wrote: »

If your wife gave the P45 from her last job to the new employer and they used the figures on that P45 then HMRC had nothing to do with underpaid tax being taken from her at all. That's how the system is supposed to work.

You leave a job and if you start another one in the same tax year you give your P45 parts 2 and 3 to your new employer. They use the figures provided by the previous employer on the P45 to start operating the tax code indicated on the P45. They then send part 3 to HMRC to let them know your wife is now employed by them. If the previous employer didn't take enough tax by not operating the tax code correctly then that's how this sort of situation can arise and by the time HMRC become aware of the previous employers failings the new employer has collected the underpaid tax.

At the moment HMRC do not have access, every week or every month, to taxpayers pay, tax and national insurance figures.

If the employer is operating correctly the above is not strictly correct. Employers should not use the tax figure shown on a P45 it is their job to work out what the correct tax figure is from the tax code and the gross pay figure. It is then this calculated tax figure that should be used by the new employer and the tax office is advised on part 3 of the P45 if the figure used is different from the one on the P45. Item 13 on part 3 of the P45....

"If the tax figure you are entering on P11 Deductions
Working Sheet differs from box 7 (see the E13 Employer
Helpbook Day-to-day payroll) please enter the

figure here."

The tax office may well later confirm that the P45 figure is the correct one to use and any underdeducted tax from the old employment would then be taken.

It is worth bearing in mind that this sort of thing can happen with a correctly deducted tax figure if there is an overlap of payments between the old and new employer, but as CLAPTON says more details are required to say what has really happened in this case.