Tax overpaid when starting work for the first time

mdr86

Last September, I started work for the first time. I was overtaxed for the tax year because tax each month was calculated based on (personal allowance / 12) rather than (personal allowance / 7), despite only working 7 months of the year, so I effectively only got 7/12th of my personal allowance. Presumably this happens to everyone who doesn't start work for the first time in April; does HMRC have a system for dealing with this? It seems slightly unlikely that *every single person* who starts work for the first time would have to manually reclaim tax for the first tax year!

AP007

mdr86 wrote: »

Last September, I started work for the first time. I was overtaxed for the tax year because tax each month was calculated based on (personal allowance / 12) rather than (personal allowance / 7), despite only working 7 months of the year, so I effectively only got 7/12th of my personal allowance. Presumably this happens to everyone who doesn't start work for the first time in April; does HMRC have a system for dealing with this? It seems slightly unlikely that *every single person* who starts work for the first time would have to manually reclaim tax for the first tax year!

What was your tax code? Where you on BR?

The personal allowance is calculated on what you are likely to earn not how long you are going to work for.

Cycrow

this is presumably for last tax year ?

did you get the end of the year report ? (P60)
and if so, then it should show on there the details.

usually if there needs to be an adjustment to the tax or a rebate they will send you the details

jem16

mdr86 wrote: »

Last September, I started work for the first time. I was overtaxed for the tax year because tax each month was calculated based on (personal allowance / 12) rather than (personal allowance / 7), despite only working 7 months of the year, so I effectively only got 7/12th of my personal allowance.

Tax is always worked out as 1/12 of each tax band but a cumulative tax code doesn't look at each month in isolation. With the correct tax code you wouldn't overpay tax.

Presumably this happens to everyone who doesn't start work for the first time in April; does HMRC have a system for dealing with this? It seems slightly unlikely that *every single person* who starts work for the first time would have to manually reclaim tax for the first tax year!

HMRC has a very good system for dealing with this and it works well if you follow the correct procedures. If you start in September and have not worked or claimed JSA since April you would complete a P46 ( not replaced with an electronic new starters form ) and tick Box A. This would give you the normal tax code of 810L (for last tax year) operated on a cumulative basis. When you are first paid in October the actual tax free allowance for that month would be £8105/12 multiplied by 7 which is £4727.92. Initially it's quite likely that you would not be paying tax to begin with until your earnings catch up.

Basically with the cumulative tax code it continually recalculates with each month looking back at what has happened before. At the end of the tax year you have paid the correct tax.

If your tax was being looked at on a non-cumulative tax basis, ie looking at each month in isolation, then the correct procedures were not followed at the start.

What was your tax code and did it have a Mth1 suffix? Did you complete a P46 when you started?

How do you know you have overpaid tax?

McKneff

Did you have any income between April and September when you started work,