Employer underpaid PAYE?

Snafu72

Dear all,

I'm a long time lurker but first time poster and in need of some advice.

I have recently received my first ever request to fill in a tax return for the 12-13 tax year so set about trying to fill it in before the end of Dec. I changed employers during the year so used information in the the P45 and P60 yet the HMRC web site tells me I have underpaid by £3,245! Not a nice Christmas present.

So the basic facts:
- I have only one employer, not other sources of income
- I changed employers on the 1st of October 2012
- Tax code from both employers was: 810L
- My new employer provided a one off taxable recruitment bonus of £40,000 to facilitate the move (included in the figures below)
- Employer 1 (6th April - 30th Sept 2012) pay to date: £37170
- Employer 1 (6th April - 30th Sept 2012) tax to date: £9809
- Employer 2 (6th April - 5th April 2013) pay to date: £86660
- Employer 2 (6th April - 5th April 2013) tax to date: £29605


At a rough guess I think my current employer underpaid the PAYE by not factoring in the recruitment bonus and that this has pushed me over the personal allowance income limit - does this sound correct?

I guess I have no other option but to pay up? I am all for paying my way but to find out I have an unexpected >£3K by the end of Jan is not ideal.

Any advice would be really appreciated.
Many thanks

jem16

Snafu72 wrote: »

At a rough guess I think my current employer underpaid the PAYE by not factoring in the recruitment bonus and that this has pushed me over the personal allowance income limit - does this sound correct?

No it isn't correct.

As you have said, you have gone over the income allowance of £100k and have lost all of your personal allowance. The £8105 of personal allowance you weren't entitled to would have seen an extra 40% tax taken which is £3242 which is why you have underpaid.

Nothing either of your employers could have done as they can only use the tax code that HMRC have given them. It would have been up to you to advise HMRC that this looked likely.

I guess I have no other option but to pay up? I am all for paying my way but to find out I have an unexpected >£3K by the end of Jan is not ideal.

I'm afraid you owe the tax and yes will have to pay. You need to watch if you are going over the £100k and a payment into your pension could have avoided it.

Ask HMRC if it's possible to pay in instalments.

Snafu72

Thanks Jem - starting to make some sense now. I will speak to payroll to make sure everything looks fine for next year - don't want another nasty Christmas present like that.

ss53

You'll need to speak to HMRC rather than payroll. Your payroll group will only use the tax code as advised to them by HMRC. The tax allowance begins to taper off at 100k and I believe disappears at 116k.