Change in tax code during employment, possible tax bill at end of year

Langtang

Hello,

My last month working with my previous employer was April 2021. I started with my new employer on the 30th April 2021. I was undertaxed on my first payslip with my new employer to the tune of c£300

 It has come to light that both my previous and new employers "claimed credit" for the full month of April (because I started new employment on last day of April, rather than 1st day of May) and as such, my tax code has now gone from 1257 to 1125 for the rest of the year to make up the overpayment to me (I had asked HMRC if I could just pay the money back to them, but they said it doesn't work that way. No problem though)

I will be retiring (early) at the end of December (although not claiming any pension(s), private or otherwise) and wondered if I'd have an outstanding tax bill after April 2022 and if so, how would I go about paying it?

Any other info that might be needed, just ask. tia.

chrisbur

To start your date of leaving and date of starting do not directly affect your tax month.  That is decided by the date you are paid.  Month 1 runs from April 6 to May 5 so it sound like both employers made a payment within this period.  
This results in you having had one tax month extra which is being slowly corrected by this tax code change.
As you are retiring early and not getting any pensions and I assume will have no other taxable income then even if your last payday was in January you would still have your tax allowances for February and March which would more than account for the extra allowance you had for April.  Considering that most of the adjustment will have been paid by the code adjustment and the unused tax months at the end of the year if nothing else affects your tax I would expect to see a tax rebate due rather than tax owed. 

Dazed_and_C0nfused

It has come to light that both my previous and new employers "claimed credit" for the full month of April (because I started new employment on last day of April, rather than 1st day of May) and as such, my tax code has now gone from 1257 to 1125 for the rest of the year to make up the overpayment to me 

No idea what that is meant to mean but all that matters is what and when you were paid.

It sounds as though you had two jobs (for tax purposes) at the same time and as a result you owe tax because two lots of tax code allowances were used in one tax month.  Nothing particularly unusual in that and if you stop being paid in December (or January) then chances are you will actually be owed a refund rather than owing any tax to HMRC.

(I had asked HMRC if I could just pay the money back to them, but they said it doesn't work that way. No problem though)

I don't think there is anything to prevent you paying it if you really wanted to but personally I think you would be far better waiting until the actual underpayment (if one even exists by the end of the tax year) is known.  Paying off an guesstimate of what you might owe part way through the year is unnecessary.

Langtang

chrisbur said:

To start your date of leaving and date of starting do not directly affect your tax month.  That is decided by the date you are paid.  Month 1 runs from April 6 to May 5 so it sound like both employers made a payment within this period.  
This results in you having had one tax month extra which is being slowly corrected by this tax code change.
As you are retiring early and not getting any pensions and I assume will have no other taxable income then even if your last payday was in January you would still have your tax allowances for February and March which would more than account for the extra allowance you had for April.  Considering that most of the adjustment will have been paid by the code adjustment and the unused tax months at the end of the year if nothing else affects your tax I would expect to see a tax rebate due rather than tax owed. 

Thanks for your reply. I didn't want to jump the gun and say that I thought I might be due a rebate. Thanks for your help.