Overpaid tax but HMRC says underpaid

politicdoctor

Hello all - new to forums, your help much appreciated! I've recently been sent a income tax banding change for tax year 2016/17 by HMRC and despite a few calls to them I still don't really understand why.

I changed full-time employment from one employer to another in August 2016, but have been paid occasionally for extra shifts for my old employer. For most of the year I’ve been on 1100L CUMU for my full-time employer and on BR for my second. I understand that income tax on two jobs is calculated by adding them together at the end of the tax year and treating them as one job for purposes of the personal allowance. HMRC's calculations for 2016/17:

Total taxable pay both jobs combined = £43109.41
Tax I actually paid: £6967.34

My calculations:

Total taxable pay = £43109.41 -£11000 personal allowance = £32109.41
£32109.41 taxed at 20% = £6421.88

From my calculations I have overpaid tax and am owed a refund of £545.46 but HMRC have sent me a letter saying I have underpaid by £1404.34. I have no idea where this comes from though wonder if it has anything to do with HMRC estimating me to on a high rate, as they told me they'd estimated my annual income for 2017/18 to be £64000 (i.e. assuming £32000 from both of my employers) whereas in reality I will earning £36000 from one employer only.

My question - am I correct or is HMRC?

Your input much appreciated! Many thanks

liviboy

At first glance it appears you are more correct than HMRC.

With the total figures given I have calculated tax to be £6443

So it could be that HMRC are a bit confused. Once you have received your P60 from both employers then I'm sure all will become clear. and if not, it will be your P60s that HMRC would want you to send them anyway.

politicdoctor

Many thanks for this. I've paid also paid £4059 in NI, so a little under what I owe (£4193) but nowhere near the figure from HMRC.

Out of interest how did you get to £6443 as opposed to £6421?

sheramber

Basic rate band is only £3200 so £109 is chargeable at 40%

molerat

I make it £6440 tax. 1100L gives a tax free allowance of £11009.16 (don't ask, it just does ) 43109.41-11009.16=32100.25 =£32100 taxable. £32000 at 20% = £6400 and £100 at 40% = £40 = £6440 tax due. Although a manual calculation by HMRC would probably not include the extra £9.16 from the tax tables so £6443.60 tax due.

chrisbur

Can you give details of the calculation used by HMRC to arrive at the underpaid figure of 1404.34?
Also from last payslips for 16/17 for each job the Year to date taxable gross, Year to date tax paid and the tax code and basis (usually follows tax code eg CUMU but may be different on the other payslip)

politicdoctor

Thanks all for the replies so far.

Chrisbur - I don't have details of the calculation, is this something I need to ask HMRC to supply?

I've just compared HMRC's letter with my payslips and have seen a discrepancy in tax codes. HMRC's has listed my full-time employer's tax code as BR but on my last 16/17 payslip it's down as 1100L CUMU. My ad-hoc employer is now 384L CUMUL on HMRC's letter and the payslip, but it February's payslip was BR.

For my current permanent employer (since August 2016)
Gross: £27580.78
Tax paid: £3883.00
Tax code: 1100L CUMU

For my previous employer until August 2016, with whom I've had ad-hoc payments:
Gross: 2748.00
Tax paid: 169.94
Tax code: 384L CUMUL (was BR in February 2017 payslip)

Is all this down to an error in tax codes?

chrisbur

politicdoctor wrote: »

Thanks all for the replies so far.

Chrisbur - I don't have details of the calculation, is this something I need to ask HMRC to supply?

I've just compared HMRC's letter with my payslips and have seen a discrepancy in tax codes. HMRC's has listed my full-time employer's tax code as BR but on my last 16/17 payslip it's down as 1100L CUMU. My ad-hoc employer is now 384L CUMUL on HMRC's letter and the payslip, but it February's payslip was BR.

For my current permanent employer (since August 2016)
Gross: £27580.78
Tax paid: £3883.00
Tax code: 1100L CUMU

For my previous employer until August 2016, with whom I've had ad-hoc payments:
Gross: 2748.00
Tax paid: 169.94
Tax code: 384L CUMUL (was BR in February 2017 payslip)

Is all this down to an error in tax codes?

Definitely ask for a calculation as to how they arrived at this figure.

Regarding your figures there seems to be some figures missing, these only add up to 30328.78.
Did your employments continue when your switched part to full time and full to part time, if so just need the figures for the last payment in the tax year. If employments ended and then re-started will need figures for each final payslip ie full time job to Aug, part time to Aug, full time to year end and part time to year end.
Not acquainted with an " income tax banding change" can you advise exactly what it says. Is there a reference number on it possibly starting P?

politicdoctor

Chrisbur - thanks for the heads up on the numbers. At the place where I've been doing ad-hoc work it looks like I've been restarted midway through the tax year as a new employee. This is explains why the number I gave you was so low. So here are the numbers by employment period at the end of the year:

April-August 2016 employment:
Gross: £17422.94
Income tax paid: £2984.46
NI paid: £1245.06
Code: 0T NONCUM

August 2016-present employment:
Gross: £27580.78
Income tax paid: £2652.26
NI paid: £2652.62
Code: 1100L CUMU

Ad hoc work former employer Feb-March 2017:
Gross: £2748.00
Income tax paid: £169.94
NI paid: £168.48
Code: 384L CUMUL

Looking at the end of year figures (must have made a mistake adding them up individually by month) I recalculate my income tax due as £7383.17 and NI owed as £4160.28. So I actually owe £440.25. Does that square with your calculations? Still a fair bit off £1404.34

HMRC have listed the code where I work at full-time as BR even though on my last payslip it is, and at my former place of work my code on the letter was swapped from 1100L to 384L. They say on the letter: 'Adjustment to rate bands - we have included this adjustment as you have more than one job or pension and we estimate some of your income is taxable at a higher rate.'

Perhaps as I have been started as a new employee where since February I was paid ad hoc they now think I am working and getting paid the equivalent of two full-time jobs?

Will this just be a case of checking this with HMRC once I get my P60s, and making sure the earnings from my old employer are listed as one as opposed to two employments?

Really appreciate your help, this has all become rather messy!

politicdoctor

To note - the letter states because of the tax code change my personal allowance was reduced from £11000 to £3841...though this would mean according to that I owe something in the range of £3303.85 as opposed to £1404.34. All very strange...

chrisbur

politicdoctor wrote: »

Chrisbur - thanks for the heads up on the numbers. At the place where I've been doing ad-hoc work it looks like I've been restarted midway through the tax year as a new employee. This is explains why the number I gave you was so low. So here are the numbers by employment period at the end of the year:

April-August 2016 employment:
Gross: £17422.94
Income tax paid: £2984.46
NI paid: £1245.06
Code: 0T NONCUM

August 2016-present employment:
Gross: £27580.78
Income tax paid: £2652.26
NI paid: £2652.62
Code: 1100L CUMU

Ad hoc work former employer Feb-March 2017:
Gross: £2748.00
Income tax paid: £169.94
NI paid: £168.48
Code: 384L CUMUL

Looking at the end of year figures (must have made a mistake adding them up individually by month) I recalculate my income tax due as £7383.17 and NI owed as £4160.28. So I actually owe £440.25. Does that square with your calculations? Still a fair bit off £1404.34

HMRC have listed the code where I work at full-time as BR even though on my last payslip it is, and at my former place of work my code on the letter was swapped from 1100L to 384L. They say on the letter: 'Adjustment to rate bands - we have included this adjustment as you have more than one job or pension and we estimate some of your income is taxable at a higher rate.'

Perhaps as I have been started as a new employee where since February I was paid ad hoc they now think I am working and getting paid the equivalent of two full-time jobs?

Will this just be a case of checking this with HMRC once I get my P60s, and making sure the earnings from my old employer are listed as one as opposed to two employments?

Really appreciate your help, this has all become rather messy!

Sorry but I am having trouble understanding these figures. Adding them up I get a total gross of £47751.72 and tax paid of £5806.66.
The tax figures themselves seem odd as would not expect to see odd pence at the end.
As I understand it you have been employed at two places. You worked at one call in employer A until August when you moved to employer B but still did some work for A while working at B.
Can you give from your last payslip at job A your taxable gross and tax paid along with tax code and the same details from your P45 if one was issued. Then the taxable gross tax paid and tax code for the last payslip for the work done after you left.
Then from the last payslip at job B taxable gross tax paid and tax code.
If you did get a P45 from job A did you hand it in to job B if so are there any payslip figures for this ie previous gross previous tax columns.
A tax code of 0T noncum is used if a payment is made after the issue of a P45 Do you know if this occurred and if so what were the post P45 issue figures?

Regarding NI this is worked out on a month by month basis so cannot be checked using yearly figures.

Not sure how you arrived at the figure of £3303.85 in you added post. Reducing your tax allowance from 11000 to 3841 gives a reduction of 7159 20% of this is £1432 ish