Help! Can anyone solve this HMRC mystery?

redandblue

if anyone can help solve this mystery, I'd really appreciate it.

I have been working on minimum wage for a charity (charity number 1) for 20 hours a week for 2 years. I have had no other jobs or income during this time.

From 10th November 2014 until the end of January 2015 I have temporary paid work for a new employer (charity number 2) for 16 hours a week on a salary of around £15K (pro rata). This job definitely ends at the end of January and my contract states this clearly.

I have been taxed at around the 80% mark in my December payslip from Charity Number 1. This happened with no warning letter from HMRC. The finance officer at the charity said I have been put on a new tax code 500L. This means I have £650 less than I was expecting. The only income I have in my December payslip is a £150 Christmas Bonus. This is not enough to live on!

The payslip for Charity 2 shows a new tax code of 500T and a figure of -£81 in PAYE tax.

I have tried ringing HMRC, the first time I waited 30 minutes and was cut off. The second time I waited 20 minutes but someone else had to use the phone so I had to give up. I have also spoken to Payroll for both charities and they suggested I ring HMRC,

Can anyone tell me what might be happening here and what I can do about it?

theoretica

What is happening is that your tax free allowance has now been split evenly between the two jobs. But, because you have had the full 10000 tax allowance on your first job up to now the computer system is now looking back over the year and thinking you haven't paid enough tax. As you are not, I think, going to earn over £5k in total on your second job you will be due a refund. How fastest to get it I don't know!

LittleVoice

redandblue wrote: »

if anyone can help solve this mystery, I'd really appreciate it.

I have been working on minimum wage for a charity (charity number 1) for 20 hours a week for 2 years. I have had no other jobs or income during this time.

From 10th November 2014 until the end of January 2015 I have temporary paid work for a new employer (charity number 2) for 16 hours a week on a salary of around £15K (pro rata). This job definitely ends at the end of January and my contract states this clearly.

I have been taxed at around the 80% mark in my December payslip from Charity Number 1. This happened with no warning letter from HMRC. The finance officer at the charity said I have been put on a new tax code 500L. This means I have £650 less than I was expecting. The only income I have in my December payslip is a £150 Christmas Bonus. This is not enough to live on!

The payslip for Charity 2 shows a new tax code of 500T and a figure of -£81 in PAYE tax.

I have tried ringing HMRC, the first time I waited 30 minutes and was cut off. The second time I waited 20 minutes but someone else had to use the phone so I had to give up. I have also spoken to Payroll for both charities and they suggested I ring HMRC,

Can anyone tell me what might be happening here and what I can do about it?

What were you expecting?


If HMRC had not split your tax code, you would have had your income at Charity 2 taxed at 20% on the whole lot. This time you appear to have received a refund of £81 in that employment.

cte1111

I had a similar problem and wrote to HMRC asking them to apply all my tax free allowance to my first job. It took them about 3-4 months but I eventually received a tax refund on my payslip.

redandblue

Thanks theoretica. I'm sure you are right and I will be due a refund because they should only tax me at 20% on any income earned over 10K. I haven't earned 10K this financial year yet. So I shouldn't be paying any tax, let along £650 PAYE tax all in one go.

redandblue

cte1111 wrote: »

I had a similar problem and wrote to HMRC asking them to apply all my tax free allowance to my first job. It took them about 3-4 months but I eventually received a tax refund on my payslip.

Thanks cte1111, that's helpful. I'll try asking the same and in the meantime, cut my cloth.

redandblue

LittleVoice wrote: »

What were you expecting?


If HMRC had not split your tax code, you would have had your income at Charity 2 taxed at 20% on the whole lot. This time you appear to have received a refund of £81 in that employment.

Thanks LittleVoice

I was expecting to be taxed at 20% on any income earned over 10K. I wasn't expecting 80% (650) of my income to go in tax in my December payslip with charity 1. Especially not without any notice from HMRC.

I understand why they split the personal allowance. That makes sense. But I don't understand why they took so much tax in the payslip from Charity 1. Even if I have gone over my personal allowance this year (and I don't think I have) I expected to be taxed at 20% for income over 5000K earned with each employer, not for most of my income to disappear.

khiller1988

From my previous experience any second job is taxed on a 40% tax and then your main job reains at the standard rate. Did you have to fill in a p46? it sounds like the hmrc dont know which is your main job and are therefore putting both on a higher tax code. They will likely calculate it over a full year rather than the partial as well, and then a refund will be issued sometimes at the end of the tax year

redandblue

Thanks khiller1988. That's interestinf. I didn't have to fill in a P46 but I will suggest this to my new employer. You might be right that they are putting me on 40% for both.

If I'd known they would charge tax over a full year rather than just for the 3 months I will have a second income, I wouldn't have taken the job because I'll end up with significantly less money than if I hadn't taken it at all. Until of course they pay me back which could be months away.

How strange. I would have thought there was a way for HMRC to charge me tax for the income I actually earn in real time, rather than making false assumptions on past and future salary.

theoretica

redandblue wrote: »

I expected to be taxed at 20% for income over 5000K earned with each employer, not for most of my income to disappear.

I calculate that you earn about £9300 a year with your first job? The bonus may have thrown my calculation out. At the end of December the tax system thinks you should have used 9/12ths of your tax free allowance for the job (now the £5k) sees you have earnt over that and takes the last 9 months tax in one lump. So the goodish news is even if you don't get this sorted out in time they won't be taking another £650 next month. More likely around £70.

LittleVoice

khiller1988 wrote: »

From my previous experience any second job is taxed on a 40% tax and then your main job reains at the standard rate. Did you have to fill in a p46? it sounds like the hmrc dont know which is your main job and are therefore putting both on a higher tax code. They will likely calculate it over a full year rather than the partial as well, and then a refund will be issued sometimes at the end of the tax year

I don't know how you gained that experience. It sounds as though your main job is expected by HMRC to just reach the upper limit for paying 20% tax and that they advise the additional employer(s) to apply 40% on your earnings there.


That is not what would happen to the OP because their earnings are not at that level.


For most people who have a main job which will use up their personal tax allowance in the year and who have some other PAYE employment, the whole of their personal allowance is used at the main employer. They advise the secondary employer(s) that they have this other job, and the secondary job(s) is/are taxed at 20% on the lot.