Paid tax but earned less than personal allowance

Eltjuh

Hi, My husband has been working on and off through a temp agency.
We have just noticed that his agency had been using the wrong taxcode for the past tax year, they used the taxcode 944L W1 and were (according to a letter sent to us by HMRC) supposed to use 974L.
Now he only worked there for about 10 weeks during the past tax year (2013/2014), before that we were on JSA.
So he rang HMRC and told them what we discovered.... they said he should be due a refund cause he'd been overpaying. Now, I get all of that..... BUT I've just realised that even if you count the JSA (which I'm not sure is taxable) he only received an income of just under £7,000 in the 13/14 tax year. Which is under his personal allowance (of £9,746 according to the letter), so he shouldn't have been paying tax at all right????

So what do we do, do we have to contact HMRC about this or do they automatically check this and send him a rebate? Or am I getting this totally wrong??

booksurr

jsa is taxable: http://www.hmrc.gov.uk/incometax/taxable-income.htm

the tax allowance for 13/14 was 9,440 so if you were on 974 there is something else you are not telling us which is worth an extra £300 pa
http://www.hmrc.gov.uk/rates/it.htm

as for what to do then a simple google search would have told you: contact HMRC http://www.hmrc.gov.uk/incometax/overpaid-thro-job.htm

Eltjuh

We got a letter from HMRC in Feb 2014 that told us that his taxcode for taxyear 13/14 had been changed from 944L to 974L And it explains on there that he is entitled to a £9,746 personal allowance. (not entirely sure why from the top of my head, something about earlier years)

I only asked what to do because last year we received a tax rebate out of nowhere (this was before he started working again). So I wasn't sure whether it was an automated process or whether you need to make them aware that you earned less than the personal allowance during the past tax year.

Also, when I rang tax credits earlier today they said the JSA was not to be included (didn't count) as his income for the past tax year.
Either way, like I said even if you count it as taxable then he would've still received less than the personal allowance. (whether that be £9,440 or £9,746 as per the letter from HMRC)


Please don't think he's been lazy and was on JSA because we liked to be, he's paid his dues having been in the army for the past 10 years. (hence the reason we've never had to deal with any of this before)

Anatidaephobia

Regardless of whether his earnings were below his personal allowances or not, HMRC will need the pay and tax details of all income from that year to enable a calculation, so JSA is relevant. Sending out repayments should be an automated process but sometimes JSA claims cause problems as the DWP/Jobcentre can be slow to send them details of how much JSA someone has received. If your husband phones HMRC, they may be able to send out the repayment while he's on the phone, or they may tell him they have missing information and then he'll have to track it down and send it to them (ie. the amount of JSA he received).

Eltjuh wrote: »

So he rang HMRC and told them what we discovered.... they said he should be due a refund cause he'd been overpaying.

So, what did they say they were going to do? Did they tell him they were going to send out a repayment? Or did your husband make this phone call before the tax year had ended?

booksurr

Eltjuh wrote: »

Also, when I rang tax credits earlier today they said the JSA was not to be included (didn't count) as his income for the past tax year.

JSA does not count as income for the purposes of calculating tax credit entitlement, but it counts as income for the purposes of calculating your total taxable income - tax credits and income tax use different figures

tax credit phone line staff are not qualified to answer income tax questions even if it looks like they are part of HMRC

he needs to phone or write to HMRC and ask for them to send out a P800 since his claim is now for the previous tax year . You cannot download a P800, HMRC must send it to you.

he also needs to get HMRC to send a code notice direct to the employment agency as the latter cannot correct the code unless told to do so by HMRC. I assume he is still dipping in and out of JSA and agency work this year? If so he is perfectly entitled to have a full tax code on his agency job - a code that ends with M1 or W1 should not be in use as he will continue to overpay tax in that case

fannyadams

"If you're unemployed for at least four weeks or you retire or return to studies

If you think you've paid too much tax, you'll need to claim a tax refund from HMRC if any of the following applies:

• you've been unemployed for at least four weeks
• you stopped working because you've retired and you're not getting a pension from your old employer
• you've returned to studying

You can claim a tax refund by filling in form P50 Claiming tax back when you have stopped working. Send this to HMRC, together with form P45, Parts 2 and 3 - and keep Part 1A for your own records.
HMRC will send you any tax refund you're entitled to by post. They'll also send you a new form P45, Parts 1A, 2 and 3, if necessary.
If you retire and get a pension from your old employer, you'll get back any refund you're entitled to with your pension payments. You won't need to claim a tax refund using form P50.
If you were made redundant contact HMRC before filling in form P50 and they will tell you what other information you need to provide.
Go to form P50
Contact HMRC


I do this as I am agency staff and get contracts as short as one week, or as long as 6 months. it's a PITA but you just fill in the form and the HMRC will work it all out for you send you a letter explaining how they worked it all out for you and tell you if you are due any rebate and then tell you that they'll send you a cheque. sometimes the cheque arrives first and the explaination arrives afterwards.
hope this helps your hubby (I'm an ex squaddie too and you don't get 'taught' about any benefits in your resettlement courses as they 'assume' you'll go straight into a job when you leave). Any issues you could ask if there's a local SSAFA group - they are a massive help.

Eltjuh

booksurr wrote: »

JSA does not count as income for the purposes of calculating tax credit entitlement, but it counts as income for the purposes of calculating your total taxable income - tax credits and income tax use different figures

tax credit phone line staff are not qualified to answer income tax questions even if it looks like they are part of HMRC

he needs to phone or write to HMRC and ask for them to send out a P800 since his claim is now for the previous tax year . You cannot download a P800, HMRC must send it to you.

he also needs to get HMRC to send a code notice direct to the employment agency as the latter cannot correct the code unless told to do so by HMRC. I assume he is still dipping in and out of JSA and agency work this year? If so he is perfectly entitled to have a full tax code on his agency job - a code that ends with M1 or W1 should not be in use as he will continue to overpay tax in that case

Oh he spoke to HMRC themselves, not tax credits about the agency using the wrong tax code.
He is still working for the agency (swapping between 2 actually, depending on whether they've got work or not) but the agency is using the right tax code at the moment, it was just last year that they didn't change it.
So he'd been overpaying tax, but in hindsight he shouldn't have been paying any tax at all.

Eltjuh

fannyadams wrote: »

"If you're unemployed for at least four weeks or you retire or return to studies

If you think you've paid too much tax, you'll need to claim a tax refund from HMRC if any of the following applies:

• you've been unemployed for at least four weeks
• you stopped working because you've retired and you're not getting a pension from your old employer
• you've returned to studying

You can claim a tax refund by filling in form P50 Claiming tax back when you have stopped working. Send this to HMRC, together with form P45, Parts 2 and 3 - and keep Part 1A for your own records.
HMRC will send you any tax refund you're entitled to by post. They'll also send you a new form P45, Parts 1A, 2 and 3, if necessary.
If you retire and get a pension from your old employer, you'll get back any refund you're entitled to with your pension payments. You won't need to claim a tax refund using form P50.
If you were made redundant contact HMRC before filling in form P50 and they will tell you what other information you need to provide.


I do this as I am agency staff and get contracts as short as one week, or as long as 6 months. it's a PITA but you just fill in the form and the HMRC will work it all out for you send you a letter explaining how they worked it all out for you and tell you if you are due any rebate and then tell you that they'll send you a cheque. sometimes the cheque arrives first and the explaination arrives afterwards.
hope this helps your hubby (I'm an ex squaddie too and you don't get 'taught' about any benefits in your resettlement courses as they 'assume' you'll go straight into a job when you leave). Any issues you could ask if there's a local SSAFA group - they are a massive help.

He's only got a P45 from the army and then a P45 from the JSA. Never got anything from the agency, cause he still gets work from them on and off. Is he supposed to get a P45 every time he works for a different company through the agency? Cause he'd been working for the council (binman) for 12 weeks as he was only allowed to do 12 weeks without being given the same treatment (and pay) as permanent staff, so obviously they'd rather get someone else in who will be cheaper. Then he worked for a different company through another agency for about 6 weeks, with about a week or 2 JSA in between these 2 jobs. And now he's back at the council through his 1st agency again.

Honestly, the army resettlement isn't very good, they do just assume you're gonna roll into a job no problem and even keep telling everyone how you'll get snapped up really quickly cause you're ex-forces and employers love that -- Doesn't seem the case!
When we were being made homeless by the army cause we couldn't afford to go rent privately and had to leave the married quarters it was one big mess aswell and SSAFA did nothing for us! They were trying to help but in fact made it worse at times and always expected my husband to help them with things like setting up tents for their events etc and to just drop everything for him to come into the office, whereas when we needed to talk to them about something we'd make an appointment and they'd be late or not show at all! It was a PITA and a VERY stressful YEAR!!


Anyway, so the tax office apparently told him they'd be sending him a refund for the wrong tax code being used. So now I'm not sure whether I should have him ring them up telling them how much he earned in the past tax year and that he shouldn't have been paying anything at all, or will they notice that themselves as they're sorting out the refund for the agency using the wrong tax code??
I guess I'll just wait and see what happens when they send the letter and cheque.

booksurr

Eltjuh wrote: »

So he'd been overpaying tax, but in hindsight he shouldn't have been paying any tax at all.

he left the army before April 2014 so his army P45 is now irrelevant as the P45 is only used if he starts a new job in the same tax year. If he starts a new job in the next tax year then his army earnings have no bearing on that new tax year. Same applies with the JSA P45 if he came off JSA before April 2014

He will not get a P45 from the agency as long as he remains on their books looking for work, even if he is not earning anything he is still "working" for them, so should not get a P45 each time he finishes a temp job with them

If he is "working" for two or more agencies then make sure that they are using the correct tax codes for someone with two jobs otherwise he could end up underpaying tax if he ever does work for both agencies in the same week and both agencies are using a full tax code

to be honest only you know what HMRC are currently doing, it seems they have told you they are working out a refund , if you believe that then wait and see, if you don't, or you want to belt and brace it, then ask for a P800 to reclaim tax overpaid in the previous year (a P50 form is not the form to use for a prior year reclaim - see my earlier link above)

jem16

booksurr wrote: »

then ask for a P800 to reclaim tax overpaid in the previous year (a P50 form is not the form to use for a prior year reclaim - see my earlier link above)

A P800 form is the calculation that HMRC send you when you request a refund - it's not something that you would request by name.

Eltjuh

ok well, I'll just wait and see what happens first, what we get from HMRC and if I need to I will get my husband to ring them and ask for a tax rebate.

Thanks for the help anyway!