P45 issue ?

alflavor

Hi wondering if anyone can help?

I joined a new company on 18th Feb, having previously worked for another company for a short time (Aug 2012-Feb 2013 - job that wasn't what I was promised.. anyway..)

I received P45 promptly from old firm, and handed this in.

My Feb pay with new company was pro-rata'd as I joined mid month, and so OT1 was used as my tax code - understand this to give me none of the personal allowance.
Had a call from HR on Friday whilst travelling back from Head Office in Germany - basically they said they had chose to put me on OT1 for a further month, and not use the info my P45 had given them, as the P45 was wrong? They said the info told them I'd earned £100K in the past year, meaning applying the info given and the tax code of 907T means all my pay would have been clawed as tax as it showed I owed a load of tax. I know for a fact I don't, I have been on 907T for a year almost now, since coming out of company car scheme.

Sorry for rambling... bear with me.

So now I have looked at my part of the P45 - and it looks fine??

Tax code shown 907T - as i thought.

Total pay correct 55616 and tax paid 12616

Then lower down - pay in the previous employment, 34416 and 6778 tax paid.

New employer have told me to speak to old employer, but to me it looks right. Anyway new job are sending me copies of their parts of the P45 to enable this - any tax experts out there willing to help me understand this better ! Thanks.

Savvy_Sue

I'd give HMRC a call: at this stage, the P45 isn't relevant much longer anyway.

do you know what tax code your current job intend to use next tax year?

chrisbur

Looking at the figures that you have given it would appear to me that the P45 was issued on month 11. If this is correct then the P45 looks good to me and that would leave you with one month of your tax allowance due to you and one month of your 20% band allowance due to you. By using 0T month 1 for two months' salary they have given you no tax allowance but two months' 20% band allowance. I cannot work out the exact figures on the details you have given but this could well have resulted in you being undertaxed a bit by the year end.

Regarding the P45 I think that it would be best to wait untill you have the copy of the P45 to see what it actually happening.

It is no good going back to your old employer as they are not allowed to issue another P45 even if it is wrong.

From what they are saying about the P45 figures " it showed I owed a load of tax" suggests to me that they may not know what to do with a P45. To have a situation where a P45 showed a lot of tax owing when the P45 was wrong (as they advised you) would suggest that they are using the tax figure from the P45 which they should not be doing. The tax figure that appears on a P45 should not be used by a new employer (except sometimes when a K code is being used) they should work out their own tax figure. But doing the correct thing in this case could complicate matters even more so hopefully the P45 copy will arrive soon and throw some light on what they are doing.

alflavor

OK so I got a scan back from HR - their copy shows the total earnt in the current tax year in total - which for me includes pay from Apr-Aug 2012 in one job, then from Aug-Feb 8th 2013 in the 2nd job.
Which to me is a correct figure. BUt they say 'oh no this means you earnt 55k in 7 months' - I say 'no that was in total since last April'

Bangs head against table. Phones HMRC - no use! Back on phone to HR this AM I think. Can't afford to be down £300 each month, that's basically my take home part of the car allowance to run my works car!

chrisbur

alflavor wrote: »

OK so I got a scan back from HR - their copy shows the total earnt in the current tax year in total - which for me includes pay from Apr-Aug 2012 in one job, then from Aug-Feb 8th 2013 in the 2nd job.
Which to me is a correct figure. BUt they say 'oh no this means you earnt 55k in 7 months' - I say 'no that was in total since last April'

Bangs head against table. Phones HMRC - no use! Back on phone to HR this AM I think. Can't afford to be down £300 each month, that's basically my take home part of the car allowance to run my works car!

Whoever you are talking to at your employment obviously has no idea what to do with a P45.

The correct procedure is given on page 20 in the E13(2012). Day-to-day payroll guide at....
http://www.hmrc.gov.uk/helpsheets/e13.pdf

The important bit is quoted below advising what to do with item 7 on a cumulative P45

"enter in column 3 of the P11 on the line immediately above

the one you will use for the employee’s first payment, the

‘Total pay to date’ shown at item 7 of the P45


•
do not enter the ‘Total tax to date’ figure, shown at item 7

of the P45, in column 6 of the P11. Instead, using the


─
week or month number shown on the P45


─
the appropriate code number (from step 3) and


─
the figure of ‘Total pay to date’

work out the tax due according to the Calculator Tables or

Tax Tables B to D and complete columns 4a, 5 and 6 of the

P11. You can find out how to do this on pages 6 to 9 of

this helpbook."

If you can get the person that you are contacting to look at this it might help.

Also you refer to HR is it possible to contact someone in the payroll department if a different section. They may not be aware that the P45 is being held by someone who has no idea what to do with it.

It is now unlikely that this is going to be sorted this tax year, and as I said earlier it is possible that you may have not paid enough tax this year, so you need to find out what tax code they are going to use next year. If they plan to carry forward the 0T then suggest to them that you fill in a P46 so that they can use the emergency tax code untill the tax office give them your correct tax code. Also contact the tax office to ask them to issue a tax code for next year to your new employer.