Tax code on PAYE - who is responsible?

djc1979

Hi,

Back in 2008 I started a new job, with a new salary, which moved me between tax codes.

As I had no previous salary reference, and paid little attention to the tax code on my wage slip as I was PAYE, I just accepted what I was being paid as ok and carried on regardless.

2 years after commencing employment I had to get a copy of my P60 from HMRC, and it was at this stage they identified I was paying too little tax. I subsequently got a significant tax claim, which I am paying them back in monthly installments. I challenged my employer at the time, and they said it was my responsibility to be aware of my tax code and how much I am paying.

My question is this, as I was PAYE, and my employer initially set my code incorrectly, is my employer actually liable for this or is it down to me? Does my case have any additional weight as this spanned over more than one tax year and was never spotted by my employer nor HMRC at the end of the tax year?

Any assistance would be appreciated and, for reference, I no longer work for the organisation.

Many thanks

alunharford

Businesses running a PAYE scheme are required to make deductions as instructed by HMRC (even if those instructions make no sense - they don't have any discretion). Your employer didn't (and can't) set your tax code - HMRC did.

It's your responsibility to check that the tax on your payslip is correct and contact HMRC if it's not (sorry - I realise most people don't!)

CLAPTON

what tax code were you on ?

Jennifer_Jane

Agree with alunharford - your money, so your responsibility. It's also not such a difficult calculation so everyone should check that their tax code is correct.

HMRC are frequently incorrect. I hope that you are now content that the amount HMRC have asked you to repay is correct, and that your current code reflects that.

In general, and not pointed at anyone at all, I don't understand why people don't check their finances more carefully and ask HR or Salaries, or on this Board, what the correct amount should be. Anyone will help.

jem16

djc1979 wrote: »

Hi,Back in 2008 I started a new job, with a new salary, which moved me between tax codes.

Did you get a P45 from your previous employer and did you hand it to your new employer? If this was your first job, did you complete a P46?

2 years after commencing employment I had to get a copy of my P60 from HMRC,

HMRC don't issue P60s - your employer does.

I challenged my employer at the time, and they said it was my responsibility to be aware of my tax code and how much I am paying.

Your employer is correct. It is your responsibility.

My question is this, as I was PAYE, and my employer initially set my code incorrectly,

Your employer doesn't set your tax code. According to HMRC rules they use the tax code in accordance with the details you provide to them on your P45 or P46. If you give them neither they are required to use BR as the tax code. (It's now code 0T but was BR in 2008)

Does my case have any additional weight as this spanned over more than one tax year and was never spotted by my employer nor HMRC at the end of the tax year?

It's nothing to do with your employer. They don't know your complete tax details. HMRC can only work with the info they get but if they get it and don't act on it there can be a case. You don't give enough info to comment on this.

djc1979

Just to thank you all for your replies, it's something thats troubled me for a while, but after reading your responses it's clear I was in the wrong.

For reference, I was on a generic code, and I did hand my P46 over to my employer when I joined, but funnily enough there was no record of this.

I have learnt from this, and the tax code was the first thing i checked when I moved to my new company.

Thanks again.

CLAPTON

what was your taxcode?

did you have a P45from your previous compnay or did you fill in a P46?

djc1979

CLAPTON wrote: »

what was your taxcode?

did you have a P45from your previous compnay or did you fill in a P46?

I was on taxcode BR, although I should have been on a higher rate tax band, and I gave them my P45 from a previous employer, not a P46. Apolgies.

Thanks

jem16

djc1979 wrote: »

I was on taxcode BR, although I should have been on a higher rate tax band, and I gave them my P45 from a previous employer, not a P46. Apolgies.

Thanks

Then your employer should have used the figures from your P45 and you should have checked that it was used.

So an error on both your part and that of the employer. Possibly something that could be argued that your employer failed to use the P45.

CLAPTON

so you are a 40% or 50% tax payer
howmuch tax was shortfall?
how much are you having to pay each month?