Huge tax bill from HMRC which I don't understand. Help!

Comms69

lizzie201296 said:

Hi all
I've actually just spotted something I overlooked re. tax codes. I've put below the tax codes for all of my payslips since joining Job 2 up until the end of last tax year, and the date of the payslip (they don't make reference to a month number, they just have 'payroll date' at the top, so I have put them in that order)

31 Aug 19: 1179L; Basic Pay: £2,603.66; Tax paid: £0 (??! - I did pay £226.16 in NI though...)
27 Sep 19: 1250L - 'Calculated on a W1/M1 basis'; Basic Pay: £2,500; Tax paid: £291.40
25 Oct 19: 1250L - 'Calculated on a W1/M1 basis'; Basic Pay: £2,500; Tax paid £291.40
05 Dec 19: 1250L - 'Calculated on a W1/M1 basis'; Basic Pay: £2,500; Tax paid: £291.40
25 Dec 19: 1250L - 'Calculated on a W1/M1 basis'; Basic Pay: £2,500; Tax paid: £291.40
25 Jan 20: 1250L - 'Calculated on a W1/M1 basis'; Basic Pay: £2,500; Tax paid: £291.40
25 Feb 20: 1250L - 'Calculated on a W1/M1 basis'; Basic Pay: £2,500; Tax paid: £291.40
25 Mar 20: 1250L - 'Calculated on a W1/M1 basis'; Basic Pay: £2,500; Bonus: £700; Tax paid: £431.40
Followed by:
25 Apr 20: 1250L; Basic Pay: £2,500; Tax paid: £291.40

So from the 25 Apr 20 the 'W1/M1' thing disappears. But how come it only appeared after my first payslip, and then stays for the rest of the year? Am I correct that this means emergency tax? (I should point out that we never got payslips monthly, my boss only gave me all of these in one go a few weeks ago after the millionth time complaining, hence why I never clocked any of this before...)

The fact I didn't appear to pay any tax on the August payslip is odd but surely that would only be about £300 owing? 

We dont need any details, you need to work it out now.

GROSS Pay - £12500 x 0.2 = Tax owed

lizzie201296

Comms69 said:

We dont need any details, you need to work it out now.

GROSS Pay - £12500 x 0.2 = Tax owed

Sorry which gross pay should I be using? The year total?

chrisbur

lizzie201296 said:

Hi all
I've actually just spotted something I overlooked re. tax codes. I've put below the tax codes for all of my payslips since joining Job 2 up until the end of last tax year, and the date of the payslip (they don't make reference to a month number, they just have 'payroll date' at the top, so I have put them in that order)

31 Aug 19: 1179L; Basic Pay: £2,603.66; Tax paid: £0 (??! - I did pay £226.16 in NI though...)
27 Sep 19: 1250L - 'Calculated on a W1/M1 basis'; Basic Pay: £2,500; Tax paid: £291.40
25 Oct 19: 1250L - 'Calculated on a W1/M1 basis'; Basic Pay: £2,500; Tax paid £291.40
05 Dec 19: 1250L - 'Calculated on a W1/M1 basis'; Basic Pay: £2,500; Tax paid: £291.40
25 Dec 19: 1250L - 'Calculated on a W1/M1 basis'; Basic Pay: £2,500; Tax paid: £291.40
25 Jan 20: 1250L - 'Calculated on a W1/M1 basis'; Basic Pay: £2,500; Tax paid: £291.40
25 Feb 20: 1250L - 'Calculated on a W1/M1 basis'; Basic Pay: £2,500; Tax paid: £291.40
25 Mar 20: 1250L - 'Calculated on a W1/M1 basis'; Basic Pay: £2,500; Bonus: £700; Tax paid: £431.40
Followed by:
25 Apr 20: 1250L; Basic Pay: £2,500; Tax paid: £291.40

So from the 25 Apr 20 the 'W1/M1' thing disappears. But how come it only appeared after my first payslip, and then stays for the rest of the year? Am I correct that this means emergency tax? (I should point out that we never got payslips monthly, my boss only gave me all of these in one go a few weeks ago after the millionth time complaining, hence why I never clocked any of this before...)

The fact I didn't appear to pay any tax on the August payslip is odd but surely that would only be about £300 owing? 

Sorry but you have 8 payments here added to the 5 you had in old job that comes to 13.  That means the August payday has been paid in the same tax month as your last month with the old employer and so should not have had any tax allowance.  In other words you should have paid 20% of your gross as tax.  That is £520.00 of the tax under paid.  
Your employer must have made some sort of error, my guess would be that they applied your P45 tax code but did not apply the pay and tax from it.  Just to check have you the part 1A if so can you advise all the figures from it and the section numbers they appear in.  Also was there an X after your tax code)) The result of using the code without the gross and tax meant that the system assumed you had no earnings back to April so took no tax.
They then put you onto the emergency tax code for the rest of the year.
This would change to a cumulative tax code when the new year started, that is just how PAYE works.

This does not seem to account for all of it but cannot look at the rest just now will have another look later tonight.

I appreciate that the tax owed on your Aug pay seems unfair but your tax allowance is split into 12 parts and if you have 13 pay days in the year one of those paydays has to have no allowance so August has to be taxed at 20% of all earnings.
Had the P45 been put through with pay and tax figures then the £520.00 tax would have been deducted from this payday. 

lizzie201296

Amazing thank you, this is starting to make sense! 
The Part 1A of the P45 says:
Section 4: Leaving date: 02/08/2019
Section 6: Tax Code at leaving date: 1179L (no X)
(There's a tick box for 'If week 1 or month 1 applies, enter 'X' int he box below.' This isn't marked.)
Section 7: Last entries on Payroll record: Month number 5
Total pay to date: £9548.75
Total tax to date: £926.40

Thank you so much for your help, I really appreciate this!

chrisbur

P45 details are correct so new employer for some reason has used the tax code from it but not the pay and tax details.
When you gave your to date details you said ....
"Gross Pay (year to date): £21,803.66
Tax Paid (year to date): £2,179.80"
....but when I add up your gross pays for your new job it comes to £20803.66
Is this possibly a typo or is that what the payslip says?