Tax code changed after last pay

Peddeh

Hi there,

I was hoping someone could help me understand what's happened here.

I've unfortunately been made redundant on the 20/07/2017 and I'm due to receive a weeks redundancy pay (£313.19), 3 weeks pay in lieu of notice (£939.58) plus of course the days worked up until the 20th (£939.58). This would mean £1,941.80 taxable income (after you add in my accrued holiday), after you deduct my redundancy pay, which isn't subject to tax (correct me if I'm wrong).

I haven't received my payslip, but I was perusing my HMRC account and have noticed my ex-employer have submitted my final pay to HMRC and I can see on the 31/07/2018 I will be paid £1,941.80 (minus £148.98 NI, £0 Tax). (In my first pay slip I was paid £1,545.09 (includes 3 days on my normal monthly income), £78.62 NI and £0 Tax with 1185L tax code).

I can see my tax code has now been adjusted to 1117LX and there's a notification on my account to say "We think you!!!8217;ve paid too little Income Tax this year and owe £94.00. We!!!8217;ll start to collect this straight away. We!!!8217;ll collect £94.00 from your taxable income before 5 April 2019. To do this, we!!!8217;ve reduced the tax-free allowance in your tax code by £678 to collect this in equal amounts."

What I don't understand is, why has my code changed to an emergency one? In my first payslip from my employer my tax code was fine. Why has it suddenly changed?

molerat

The reason for using an emergency code is too even out the collection over the rest of the year, a normal code would collect it all in one go.

Peddeh

molerat wrote: »

The reason for using an emergency code is too even out the collection over the rest of the year, a normal code would collect it all in one go.

Am I correct in assuming that once they have collected the amount owed, my tax code will revert back to 1185L?

Dazed_and_confused

That generally depends on the what the Personal Allowance is next year (2019:20 tax year).

It may be 1185L but in recent years the Personal Allowance has increased each year so from next April, when your tax code would usually revert to normal, it could be slightly higher, possibly 1200L or more depending on what the chancellor decides.