Why have I paid less tax?

Jamie_Limehouse

Hi Guys,

First post, not sure if I'm in the right area. Apologies if so. I've been undertaxed.

My salary is 50k. Monthly, gross is £4,166.67 and last month (31/08) I paid £724.46 and £376.73 in NI.

This is about normal, I've been on the same salary for a few years.

This month (29/09) the gross was the same, but PAYE shows -£208.86 and NI £376.73. This is about £1000 more net than usual.

This is my second pay check from this job. I have worked for 3 different companies this year and have moved house about a month ago. (Jobs: 2 years at one company, ending end of May; 2 months for June and July; current job starting 01 August). EDIT - The point of this information is, despite moving jobs, I haven't missed a paycheck this year, which if I had might affect tax I think?

What affects the amount taken by PAYE - could it be I've underpaid due to not updating my address information with work (i.e. the tax man thinks I'm a different / new person as my bank is no longer registered the old address which work holds)? Or could it be the case that I've overpaid tax through the year, and PAYE is correcting that? Or something else?

Worried about being hit with a big tax payment next month.

Very appreciative for any pointers anyone can give.

Thanks, Jamie.

Dazed_and_confused

That's a substantial difference so if the tax code on your payslip is the same as usual then possibly one of the previous jobs hasn't been taken into account when your employer calculated this month's payment?

Does your payslip have cumulative pay details? If so you should be able to work out which of the previous jobs has been included.

Did you give P45 from job 1 to job 3 by any chance?

It highly likely to be wrong so you should keep some set to one side so you have that available whenever it is ultimately corrected.

badmemory

Have you notified HMRC of your change of address? If you have not you may be at risk of missing something important like being asked to file self assessment which comes with penalties if you fail to do so in time & your income could be borderline. It's not worth leaving this to chance.

glider3560

Check the YTD (year to date) figures on my current and last payslip. You'll probably see the most recent one (with the tax refund) includes figures from your previous jobs, whereas the first one didn't.

Also, you might see the first payslip had a month 1 (M1, W1, X, etc etc) marker somewhere on the payslip. This means they aren't taking your previous earnings into account.

molerat

I have run the figures and it seems likely that Aug was calculated on 1150 M1 and Sept calculated on 1150 cumulative at M6 with no earnings before Aug - tax due on 2 x 4166.67 at M6 would be £515.60 with £724.46 paid so a refund of £208.86.

Tax actually due will likely be 2 x £724.46 = £1448.92 and tax actually paid £515.60 so leaves an underpayment of £933.32. If they carry on uncorrected then each month you will underpay by £82.86 so need to keep that back as well. All this of course depends on what you earned up to changing jobs.

So a big repayment due when they eventually catch up and figure out what has happened. Did you give your P45 to the new employer ? What were the figures on it ?

Jamie_Limehouse

First of all - thank you all for the prompt feedback and your time spent replying.

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@glider3560 - Thanks for the input.

The YTD totals are only including payments from this job (M1: £4,166.67, M2: £8,333.34).

And, to the second point, they are: M1: Tax Basis: Week 1/Month 1, M2: Tax Basis: Cumulative.

Seems strange that the first month's tax was correct, then second was the undertaxed.

Do you conclude anything from the above feedback?

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@molerat

Both payslips state: Tax Code: 1150L

I honestly can't remember if I gave them the P45. I've been on the same salary amount (50k) since Jan 2016 and haven't missed a paycheck since then, despite changing jobs.

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Looks like I have definitely underpaid and this will need to be repaid in due course.

What steps can I take to manage this repayment gradually, rather than one hit.

Do I speak to payroll at my company? Or does HMRC manage what's taken through PAYE?

Thanks, Jamie.

Edit: typos

Jamie_Limehouse

Edit: Not sure I ever got my P45 from "Job 2". However defo gave my P45 to Job 2.

glider3560

Jamie_Limehouse wrote: »

Do I speak to payroll at my company? Or does HMRC manage what's taken through PAYE?

Your payroll will work on the information given to them in your P45 and by HMRC.

You should log into your online HMRC account (get one if you need to), where you can check that HMRC have all the correct figures for each payslip this year. Once logged in, go to https://www.tax.service.gov.uk/check-income-tax/taxable-income. From there you can click "View Details" next to each employer to ensure all the figures have been reported correctly.

Jamie_Limehouse

Thanks again for your input.

Signed up and logged in. For current employer it reads as follows.

Would have posted an image but cannot as a new user on the forum.

Income Tax and National Insurance paid to 31 October 2017

Your taxable pay between 31 July 2017 and 31 October 2017 is £12,500.01.

Using the figures supplied by your employer we estimate your annual taxable income from them will be £33,467.

Also - yes, the amounts relating to previous employers appear correct.

Any pointers?

Jamie_Limehouse

There is an option to 'Update your annual taxable pay'

However I'm worried they'll take it all in one go and it will cause cashflow problems next month.

glider3560

If HMRC have all the correct figures, you need these to be sent through to your current employer (this is the idea of a P45). In theory, this should happen automatically within the first few months of employment, even without a P45.

If you call (or even live chat online) with HMRC, they can expedite the process and send all the figures through to your new employer.