Any tax whizzes? Changing jobs query

auburnette

Hi,

I have just changed jobs and am worried I underpaid tax this month (a colleague who started last month in similar circumstances reports a big clawback through PAYE this month)

I left Employer 1 on 4 December 2015. My last payslip from them showed a gross pay of £806, but then a positive tax adjustment leaving me with a net pay of £1336.93 (with very minor deductions for NI, pension etc). The tax code was 1060L.

I filled in the new starter checklist at Employer 2, as my p45 was not generated at the time i started work. I received my P45 from Employer 1 in the middle of the month showing to Month 9 I was paid £39016.26 and tax on this was £7655.85.

I started work with Employer 2 on 7 December 2015. My first payslip from them uses tax code 1060L 1.

Basic pay for the days worked this month at Employer 2 was £4435.48 and deductions were:
pension £326
student loan £269
Tax £760.25
NI £321.36.

So to date this financial year I have earned £43451 and been taxed £8416.

Does this look like I have underpaid tax or am underpaying tax this month? I can't figure out if the strange positive tax amount from my last employer was an error which will be recouped in Jan, or an adjustment because something wasn't right previously.

Quite keen to get it right as I have a big expense in Feb and need to know how to adjust cash flow!

Thanks in advance to any whizzes who can help :A

auburnette

hi molerat, it doesn't seem to have one!

It shows the pay period (1 Dec 15 to 31 Dec 15).

Under taxable pay it shows £4109.47 for both the period and the tax year.

auburnette

...I'm beginning to think there's an underpayment this month. My net salary on a gross of £55000 was about £2850 in months where i didn't get performance bonuses; my salary's increased to £66000 so presumably yielding a net salary of £3200 ish.

Net salary of £4010 seems a bit wild unless something was wrong with my tax code previously.

edit: Oh! So you think the strange payslip from my old employer with the positive tax figure was a correctly made adjustment?

I'll hang on to what seems like the excess for the time being in case anything goes funny next month but that would be fantastic if so!

molerat

I have deleted my posts as it is confusing both me and you. Yes I think you have underpaid tax.

auburnette

ok, thanks molerat!

To me it does seem like I've been given the tax free allowance twice although the underpayment seems smaller than I would expect. I think my colleague faced a very substantial clawback this month (he earns more than me though).

Not sure what the point of the new starter checklist is if it generates these sort of things! Worse than paying too much tax as calculating the right amount is well beyond me...

auburnette

Alas, my old employer has only just paid me (payroll normally on last working day of month, but moved for Christmas), and my new employer also pays on last working day of month.

I think the safest thing to do is keep everything that seems like overpayment just based on what my net salary normally comes out as, until I see what happens in Jan. So that's about £1000. But reclaiming that large an overpayment in a single month seems very odd...you presume that the calculation is vaguely right and you aren't going to face a massive hit the following month!

chrisbur

The important question here is when is your payday, this time of the year paydays are often bought forward.
Your P45 is for month 9 which covers all payments made between 6 Dec and 5 Jan and will have used up your tax free allowance and 20% band allowance for that period. Obviously your first payment from your new employer also falls in that period but would not be treated as falling in that period if it would normally be due after 5 Jan and was just brought forward for Christmas.

Hopefully your payslip will have a month number on it.
If that is month 9 then the emergency tax used by your new employer will have given you a tax allowance and 20% band allowance that you are not entitled to and you will have been undertaxed and this will be corrected next month when the P45 is applied.
If however the month number is 10 then this will not be the case.

agrinnall

molerat wrote: »

I have deleted my posts as it is confusing both me and you. Yes I think you have underpaid tax.

Well it's certainly confusing us because having done so means that the OP's responses to whatever it was you said now has no context. I'm quite surprised that a poster of your experience feels that was a sensible thing to do.

auburnette

chrisbur wrote: »

The important question here is when is your payday, this time of the year paydays are often bought forward.
Your P45 is for month 9 which covers all payments made between 6 Dec and 5 Jan and will have used up your tax free allowance and 20% band allowance for that period. Obviously your first payment from your new employer also falls in that period but would not be treated as falling in that period if it would normally be due after 5 Jan and was just brought forward for Christmas.

Hopefully your payslip will have a month number on it.
If that is month 9 then the emergency tax used by your new employer will have given you a tax allowance and 20% band allowance that you are not entitled to and you will have been undertaxed and this will be corrected next month when the P45 is applied.
If however the month number is 10 then this will not be the case.

Payday for both employers is the last working day of the month, but Employer 1 has been brought forward to 22 December and Employer 2 has not and will be paid on 31 December.

From what you say they are both covering the same period - looks like i need to contact payroll to find out how big the overpayment was to understand what I face next month.

I do find it a bit surprising this happens when you've filled out the forms and everything - potentially a huge variance between salary this month and next month - OK if you realise what has happened but no good for managing cash flow otherwise.

molerat

Tax rebate of £560.95 ?(assumes £806 gross pay is taxable pay after pension deduction)
Tax due on £39016.26 at M9 is £7655.85.
Tax due on £43125.74 at M9 is £9299.45
Tax paid to M9 is £7655.85 + £760.25 = £8416.10
£9299.45 - £8416.10 = £883.35 underpayment.
Does that sound about right ?

chrisbur

I agree with that, looked at in a slightly different way.
£4435.48 less pension of £326 leaves £ 4109.48 which as all tax allowance and 20% band used up should have been at 40% so £1643.79 in tax due £760.25 paid so far so £883.54 underpaid.
(give or take a few pence)

Regarding the comment from the OP
"I do find it a bit surprising this happens when you've filled out the forms and everything - potentially a huge variance between salary this month and next month - OK if you realise what has happened but no good for managing cash flow otherwise."

I do sympathise but filling in the forms does not help to work out the correct tax, only the P45 has the information needed. The emergency tax procedure cannot guarantee that the correct tax is deducted it is no more than a best guess and sometimes it is way out as in this case.