Tax Code Confusion

hardpowered

Hi there

Long time no speak!

I have a really complicated situation... Complicated for me anyway.

I was employed full time, working 37.5 hours a week earning £26,000 a year (although I had a payrise early in the year). This was tax year Apr 2014 to Apr 2015.

My P60 says the following:

Total pay for the year: £25,498.49
Tax deducted: 3,085.80

Final Tax Code: 1006L

Employee's NIC Paid: £2,105.11

I lost my job in April but was paid holiday entitlement and some overtime.

I received my P45 from my previous employer for tax year starting April 2015 (but I was only employed for the first 21 days of this month).

Total pay to date: £1785.70
Total tax to date: £179.20

However the TAX CODE AT LEAVING DATE is 1066L.

I have received my PAYE Coding Notice which is worded as follows: Your new tax code for the year from 6 April 2015 to 5 April 2016 is 833L which replaced 1066L.

I have an 'Underpayment restriction' of £2324 applied which is to repay £571.80 (20% of £2324).

My wageslip for the month of May 2015 (my first month at the new job) shows pay for this period is £801.23 with tax paid £161.60.

This is crazy to me and I'm struggling to understand what's happened. I obviously need to call HMRC (wish me luck) but would like some understanding of what's going on before I do so.

Does anyone have any ideas what has happened?

Thanks very much.

purdyoaten

There are two issues:

1) The restriction in your tax code. You need to clarify how this arose - did you not receive any kind of calculation for an earlier tax year?

2) you have paid basic rate tax on all of your May earnings - with no personal allowances. This is because either:

a) your new employer did not operate the code on your P45 or

b) you received some payment in May from your old employer

Clarify with your employer why all of your earnings were taxed at 20% referring to a) above.

Also check that the PAYE reference on your new coding notice does not correspond with the PAYE reference on your P45. If it does, HMRC still think that you are working for your old employer.

jem16

hardpowered wrote: »

I received my P45 from my previous employer for tax year starting April 2015 (but I was only employed for the first 21 days of this month).

Did you give your P45 to your new employer and if so when?

hardpowered

purdyoaten wrote: »

There are two issues:

1) The restriction in your tax code. You need to clarify how this arose - did you not receive any kind of calculation for an earlier tax year?

2) you have paid basic rate tax on all of your May earnings - with no personal allowances. This is because either:

a) your new employer did not operate the code on your P45 or

b) you received some payment in May from your old employer

Clarify with your employer why all of your earnings were taxed at 20% referring to a) above.

Also check that the PAYE reference on your new coding notice does not correspond with the PAYE reference on your P45. If it does, HMRC still think that you are working for your old employer.

jem16 wrote: »

Did you give your P45 to your new employer and if so when?

Thanks for that.

I tried calling them at lunch time but after an hour didn't get through!

hardpowered

I gave it to them when I first joined in May, and the tax code on it was used on my wages.

CLAPTON

hardpowered wrote: »

I gave it to them when I first joined in May, and the tax code on it was used on my wages.

which tax code was used on your May wages?
what do the total to date figures say (i.e. earnings to date and tax to date)

jem16

hardpowered wrote: »

I gave it to them when I first joined in May, and the tax code on it was used on my wages.

Not according to this unless you don't really mean that £161.60 tax was paid on £801.23;

hardpowered wrote: »

My wageslip for the month of May 2015 (my first month at the new job) shows pay for this period is £801.23 with tax paid £161.60.

Can you give all the figures from this payslip so we can see what's going on.

chrisbur

hardpowered wrote: »

I gave it to them when I first joined in May, and the tax code on it was used on my wages.

From part 1A of your P45 what is the month number and from your first payslip with your new employer what is the month number on that?

purdyoaten

chrisbur wrote: »

From part 1A of your P45 what is the month number and from your first payslip with your new employer what is the month number on that?

From the P45 - tax paid is £179.20 - or 896 taxable at 20%.

The op received pay of £1785 - therefore 889 of personal allowances given which happens to be 1/12 of 10660. The problem is not with the P45, it seems.

It would appear the problem lies with when or if the new employer received the P45 and whether used against May salary.