Tax and Income Drop

Lady_Pink

Hi,
Apologies if this is in the wrong place, or if it's a stupid question - I'm currently very pregnant and have been ill for 7 months, so not thinking my clearest ATM! Please be nice!

I was TUPEd from my original employer of the last 12 years to the local council in April this year. They were undergoing a 'restructuring process' where we had to reapply for our jobs, I was offered a full time post even though they knew I could only work pt and i have subsequently been given notice of redundancy as of start of august. It looks like they will be shafting me out of a reasonable amount of money (long story) so I'm trying to prepare financially.

My income will drop dramatically in August as I will be getting SMP only. I've been trying to find out what happens re tax when your income drops mid year - will my employer notify Hmrc or will I have to do this? As I've paid tax so far this year will they adjust/reduce tax taken for the rest of the year to take into account the drop in income? We don't qualify for tax credits or any help, just SMP which I know it's taxable.

Hope this makes sense, just feel overwhelmed by everything at the moment!

Skint_yet_Again

Do you know what tax code is being operated by your employer at the moment ? It should be on your payslips.

If we divide your tax code allowances by 12 months this should show how much you can receive before tax each calendar month you are paid (assuming you are paid calendar monthly).

EDIT - EG code 1060L = tax free allowance 10600 divide by 12 = 883.33 per month tax free. You pay tax on anything over £883.33 per month

If your pay is below the monthly tax free allowance you should receive the full amount and no tax deducted. Any unused tax allowance left over that month are then set against your earnings for the previous months back to the start of the tax year on 6 April and you will get some tax refunded.

This usually all happens automatically by your employer through payroll

Skint_yet_Again

If you are made redundant you should get a P45 from your employer and you may then be able to claim a tax repayment depending on what you intend to do next

https://www.gov.uk/government/publications/income-tax-claiming-tax-back-when-you-have-stopped-working-p50

Best of luck with the rest of your pregnancy and hope you are feeling better soon x

Lady_Pink

Thanks! I worked out that by the time my 90% SMP finishes, with tax I've already paid this year, I should have be paid enough tax to cover the year, so I would then get tax rebate on what I've paid while paying any tax due simultaneously? So complicated!
Thanks for info re employer sorting it all out, didn't relish ringing HMRC with a newborn, lol, although I'm not sure I hold out much hope that my new employer will get it right.

I miss my old employer and having a job, I've always worked and it's been such a rubbish year so far. So much for pregnant women and part time workers being protected by law!