HMRC and Martin, we have a problem - WFH tax allowance

Savvy_Sue

At least I think we do. 

Possibly I'm missing something, in which case I know I can rely on you lot to tell me ... 

The problem
If you claimed WFH tax allowance in 2020-21, everyone (from Martin to HMRC) is saying that you need to make a fresh claim for 2021-22.

HOWEVER HMRC have also instructed employers to increase whatever your tax code was at the end of the year by a set amount (depending on whether you have L, M or N as your suffix), without taking into account how that tax code was arrived at, and this is what our Payroll software has done.

This means that if you have already claimed WFH for 2020-21, and you claim it again for 2021-22, it looks as if you will end up paying less tax than you are supposed to. 

How I found the problem
Last night I logged in to make my claim for 2021-22, and it was successful: new tax code arrived. Then I looked to see how it was made up - Marriage allowance was there, WFH for 2021-22, AND £312 'other allowances' - which is £6 per week and looks remarkably like the WFH allowance. 

Before anyone asks, no, I am not entitled to any other allowances. I can (and will) remove it, and if I had checked how my tax code was arrived at BEFORE I'd made the claim for 2021-22 I might not have made it. 

So am I right? Is this a problem? I'm suggesting to my colleagues that they don't rush to make a claim for 2021-22 if they'd already claim in 2020-21 ... 

And I'm going to report my post so that those in MSE Towers can take a look too ... 

ErinGoBrath

Savvy_Sue said:

At least I think we do. 

Possibly I'm missing something, in which case I know I can rely on you lot to tell me ... 

The problem
If you claimed WFH tax allowance in 2020-21, everyone (from Martin to HMRC) is saying that you need to make a fresh claim for 2021-22.

HOWEVER HMRC have also instructed employers to increase whatever your tax code was at the end of the year by a set amount (depending on whether you have L, M or N as your suffix), without taking into account how that tax code was arrived at, and this is what our Payroll software has done.

This means that if you have already claimed WFH for 2020-21, and you claim it again for 2021-22, it looks as if you will end up paying less tax than you are supposed to. 

How I found the problem
Last night I logged in to make my claim for 2021-22, and it was successful: new tax code arrived. Then I looked to see how it was made up - Marriage allowance was there, WFH for 2021-22, AND £312 'other allowances' - which is £6 per week and looks remarkably like the WFH allowance. 

Before anyone asks, no, I am not entitled to any other allowances. I can (and will) remove it, and if I had checked how my tax code was arrived at BEFORE I'd made the claim for 2021-22 I might not have made it. 

So am I right? Is this a problem? I'm suggesting to my colleagues that they don't rush to make a claim for 2021-22 if they'd already claim in 2020-21 ... 

And I'm going to report my post so that those in MSE Towers can take a look too ... 

Mine looks fine after claiming the £312 for 2021/22 using Martin's link ...


EDIT: I cannot see HMRC increasing everybody's code for WFH as not everybody is WFH.

Savvy_Sue

I'll try and put mine up later ... 

Dazed_and_C0nfused

HOWEVER HMRC have also instructed employers to increase whatever your tax code was at the end of the year by a set amount (depending on whether you have L, M or N as your suffix), without taking into account how that tax code was arrived at, and this is what our Payroll software has done.

That isn't true though.  The P9X procedure only applies to those employees where a new code for 2021:22 hasn't been notified separately.

Plenty of people have had new 2021:22 codes without the WFH allowance so it seems more likely the issue is with you not getting (or not noticing) separate tax code updates for 2021:22.

[Deleted User]

May I suggest that ‘in making my claim for 2021/22’ the allowance was already in the code, carried forward from 2020/21 in this case? 

So now we have two claims for the same amount, albeit the ‘second claim’ under other allowances.

I also completely agree that this has zero to do with the annual P9x procedure. 

Savvy_Sue

Dazed_and_C0nfused said:

HOWEVER HMRC have also instructed employers to increase whatever your tax code was at the end of the year by a set amount (depending on whether you have L, M or N as your suffix), without taking into account how that tax code was arrived at, and this is what our Payroll software has done.

That isn't true though.  The P9X procedure only applies to those employees where a new code for 2021:22 hasn't been notified separately.

Plenty of people have had new 2021:22 codes without the WFH allowance so it seems more likely the issue is with you not getting (or not noticing) separate tax code updates for 2021:22.

I definitely haven't had any separate notifications, for me or any of my colleagues, and our payroll software has just updated from one year to the next by adding the figures indicated in the P9x - how could they do anything else since the composition of the code isn't known to the payroll software?

Maybe the revised codes are being sent gradually, in which case I will (obviously) update as they arrive.

Savvy_Sue

[Deleted User] said:

May I suggest that ‘in making my claim for 2021/22’ the allowance was already in the code, carried forward from 2020/21 in this case? 

So now we have two claims for the same amount, albeit the ‘second claim’ under other allowances.

I also completely agree that this has zero to do with the annual P9x procedure. 

Yes, I think the allowance has been carried forward from 2020-21, and then I've claimed for 2021-22. 

But in the absence of a new tax code, the payroll software has behaved correctly, no? 

And something's gone wrong if HMRC have not ended the 2020-21 allowance at the start of the new tax year, no?

[Deleted User]

The payroll software would not have operated incorrectly. Presumably, as I said the allowance was in the code at the end of the year. You state ‘without taking account of how the code was arrived at’ - that is how it works! The employer is asked to increase a number by 7 (this year) for all L and M codes without regard to the composition. 

Elvie100

We apply the PX9, then process the new codes sent for individuals so it’s overridden.  We had over 250 individual changes I think...majority of codes were sent out sometime in March.  I expect we’ll have a load more to add the wfh allowance back again!

Savvy_Sue

Elvie100 said:

We apply the PX9, then process the new codes sent for individuals so it’s overridden.  We had over 250 individual changes I think...majority of codes were sent out sometime in March.  I expect we’ll have a load more to add the wfh allowance back again!

That's the thing, I've had NO new codes (and I check online rather than trusting them to arrive by email or post). Although our payroll is smaller, c. 40, so maybe we're lower priority. I know some people did claim WFH last year. 

This is what my latest tax code looks like on the government gateway:



So you think I can stop panicking, wait for revised tax code to arrive, and assure my colleagues it's OK to claim the 2021-22 allowance now? And if my revised tax code doesn't appear when I check online for the May payroll, I'll know we've got a problem ... 

[Deleted User]

Is that not the code that you want to have - with the 312 included? If so, I wouldn’t worry about how HMRC has designated it - other expenses or job related expenses.

Or is it the case that you have received the P2 and your employer hasn’t?

I have a relative who claims WFH in 2020/21. I informed him that he would be required to reclaim in this tax year. All that happened was that his code has increased by 7 points - 1288L to 1295L under the P9x procedure.