BR Tax Code\Tax Refund

hmd1987

My wife was recently made permanent at work and was given an official start date of 2nd Jan 2012. First pay at the end of the month comes through and she has been allocated a BR tax code. Tries to contact the IR after several attempts makes it through to someone who said it will revert back to normal in Feb. Feb pay - again still on BR.

Back onto IR, who eventually get it sorted and advised that it will definitly be on the standard 747L tax code for March pay, and thats when she would get the refund.....March pay arrives, now correct tax code but no tax refund?

Its a nightmare trying to get hold of someone at IR, was wondering if anyone knew when she might get a refund? Worked it out to be about £200 back

CLAPTON

does she have a P60 for the year?
in any event

how much did she earn before tax for the whole year
how much tax did she pay for the whole year
what was her final taxcode for the year?

hmd1987

Thanks for the reply

I think she has her p60, I will have to check.

She was on a temporary contract for the whole year, but switched to permanent in Jan - She had been previously on the 747l code, but HR had messed up changing her contract hence her going on the BR code for 2 months.

When she was temp, she was paid weekly and no longer has access to those pay slips...Her official "perm" payslips, the March one says:

Pay to Date - 3983.48
Tax to Date - 671.80
NI to Date - 261.29
Taxable to Date - 3983.48

CLAPTON

are you sure her final tax code was 747L and not 747L M! (or similar?)

anyway without know her full earnings and her full tax it's pretty impossible to comment

best to phone HMRC and speak to them; unfortunate if she doesn't know what she earned or what tax was paid but hopefully HMRC will have the correct figures.

presumably her current code is correct?

hmd1987

actually her last tax code was 747 L M - What does this mean?

Yep will try calling hmrc but everyone knows its a nightmare to get through

Her new tax code is 810L

CLAPTON

try calling HMRC after 8am; I've never had any trouble getting though

jamesd

747L M1 would mean using month 1 basis - not cumulative basis - for her tax calculations. It divides the annual personal allowance into equal portions for each month and uses that equal proportion for each pay calculation. So it won't drift too far away from what the proper tax deduction should have been for those months.

It's also used sometimes for things like issuing a lower tax code for a few months to collect arrears of tax. The lower code and M1 combine so the amount of extra tax taken each month is predictable.

If she'd been on month one basis for the three months it'd have looked something like this:

Allowance 7470 / 12 = 622.50 * 3 months = £1867.50
Pay 3983.48 - 1867.50 = 2115.98 taxable
basic rate tax of 2115.98 * 0.20 = 423.20

The two months on BR look to have caused a tax overpayment of about 671.80 - 423.20 = 248.60. That's because BR doesn't use the personal allowance at all, charges basic rate on all of the income.

HMRC may give her a higher tax code for the current year so that the extra tax is repaid over the year.

McKneff

As far as I know HMRC have now started to calculate overpayments automatically and a cheque issued automatically, at least I was told this earlier on in the week when I rang to query my overpayment for the last tax year. I should expect a cheque in 4 to 6 weeks.