M1 tax help

houghton91

Hi all,

I started a new job in September. I was paid for that month on an M1 tax code as I hadn't got a tax code from my previous employer yet. 

Now on month two I'm on my old tax code again, however,  the company has taken the tax I didn't pay in M1 out of my pay in M2, essentially doubling the tax I'm paying in October. As I'm on a 40% rate as you can imagine - this is quite hefty. Is this the correct way to do things? In the past my previous employers have made up the difference missed in M1 over the remaining months before the end of the tax year - not in one month.

Can anyone advise please?

zagfles

What were the actual codes? Usually an emergency code results in too much tax being paid not too little, but if you have other income which reduces your code it can be the other way round.

Dazed_and_C0nfused

If you have simply moved from one job to another it should be straightforward.

What happened with your P45 from the old job?

Some issues do occur when you are paid by both companies in the same tax period, you often then owe tax as a result of having two jobs at the same time.

houghton91

The P45 was submitted just after M1 in Sept, so has been taken into account for October. [redacted specific pay info]

The tax code on my payslip is different to the one on my government gateway.

 

houghton91

I was on 1250L at my old job and paid the expected amount of tax, it's only been confused since I moved jobs. They say I was put on 1257LM1 in Sept, and back on 1257L in October. 

zagfles

Did you get paid in both jobs in Sept?

houghton91

I did, but the previous job's tax for sept was accounted for in my p45

zagfles

Yes but you had 2 allowances and 2 basic rate bands in both jobs for the same month. If say you got half a month's pay in each job in Sept, so same total as usual, you'd have paid a lot less tax than you normally would if you'd had all the pay in one job. Because they're both giving you your tax allowance etc. So that's what's being taken back.

If you got a lot more in total in Sept eg because you got redundancy, accrued holiday pay etc in the old job, then you won't have been taxed enough for the same reason. But the extra tax should be far less than the extra pay you got in Sept.

houghton91

It looks like the new role taxed me incorrectly in Sept and is 'making up for it' in October - my q is, is it normal to take that back in one pay period, or is it usually corrected by a tax code change over the coming months?

molerat

Your new employer taxed you correctly according to the information they had in Sep.  Unfortunately it led to you being under taxed YTD and that has been corrected in Oct.  It is quite normal for it to be corrected in the following month and you are no worse off over the 2 month period.

Why were you on 1250L for the early part of the year ?  What tax code does you GG account show if different from 1257L ?

Dazed_and_C0nfused

timmins91 said:

It looks like the new role taxed me incorrectly in Sept and is 'making up for it' in October - my q is, is it normal to take that back in one pay period, or is it usually corrected by a tax code change over the coming months?

It can be either way but the simplest option, when you have had two jobs at the same time (for tax purposes) and received two lots of tax code allowances and basic rate band, is to stick with the cumulative tax code and the tax should now be correct*.

If you put your expected November pay into a salary calculator like this, on a cumulative basis with October's payslip details, you should the tax return to normal.

http://payecalculator.hmrc.gov.uk/PAYE0.aspx

*correct for that tax code