Tax code after recent job change

sol2017

I have just changed jobs and I am totally confused about the tax code. Hope someone can help me understand.

I started my new employment on the 7th March, and left my previous employment couple days before that.

I have only just received P45 from my previous employer, as they pay salaries monthly. 

My new employer received HMRC Starter form I submitted, and have put me on tax code 1257LM1 for now. This tax code was used for my first salary and in P60.

Until this point I thought that I will just give my new employer P45 and from this month that will put me back on 1257L tax code. However, today I received tax code notice from HMRC saying that I owe £1K tax and that my new tax code will be 1152L. I don't understand why they think I owe tax...

Can somebody help me understand what's going on please? And how do I get my tax code corrected?

Thanks

Dazed_and_C0nfused

I think you have completely misunderstood.

Firstly you likely owe tax because you had (for tax purposes) two jobs at the same time.

But I bet you only owe c£200 not £1k.

Can you post the payslip details for month 12 from each job.

And the breakdown of the new 1152L tax code.

chrisbur

Are you sure that they say you owe £1000 in tax; it appears from the tax code adjustment that they have adjusted your tax code by 105 which would if paying tax at 20% result in you paying an extra £210 in tax.  Almost certainly caused by both old and new employer giving you a tax allowance for month 12.
To check this can you advise pay and tax figures from P45. 

sol2017

@Dazed Thanks for the comment. I did not have two jobs at the same time.

@chrisbur here are the numbers in the letter:


I noticed that letter is dated 24 March 2022. Could that be something to do with it?

[Deleted User]

chrisbur said:

Are you sure that they say you owe £1000 in tax; it appears from the tax code adjustment that they have adjusted your tax code by 105 which would if paying tax at 20% result in you paying an extra £210 in tax.  Almost certainly caused by both old and new employer giving you a tax allowance for month 12.
To check this can you advise pay and tax figures from P45. 

Indeed - tax allowance £1047 per month @20% is £209.80. Fairly evident that op paid by old employer at beginning of March (4th?) and by new employer at end of March.

Dazed_and_C0nfused

@Dazed Thanks for the comment. I did not have two jobs at the same time.

I think you'll find that if you check your payslips you did.

If your pay frequency was monthly with both jobs and you were paid for the last time after 5 March then that falls into month 12 of the tax year.

And if you were paid by your new employer before 6 April 2022 that also falls into month 12.

Hence two jobs in the same tax period.

And you owing c£210.

sol2017

Both employers paid at the end of the month.

There is also WFH benefit in play which changed my tax code with the previous employer to 1288L in the last month...

Dazed_and_C0nfused

sol2017 said:

Both employers paid at the end of the month.

There is also WFH benefit in play which changed my tax code with the previous employer to 1288L in the last month...

So two jobs at the same time for tax purposes.

If one used 1288L and the other 1257L you will have received the benefit of £1,048 too much tax code allowances in 2021:22.

For a basic rate taxpayer that will result in tax owing of about £210.

A tax code restriction of £1,049 for a basic rate taxpayer will collect an extra £209.80 (£1,049 x 20%).

All seems in order.

sol2017

Thank you for explanation, I think it's slowly sinking in 😆 Having always been employed and therefore tax taken care of, it all seems very confusing. But I get it now. Thanks again!

Dazed_and_C0nfused

Just think of it as an interest free loan from HMRC 

In a perfect world where you were able to get your P45 to your new employer in time you would have paid £210 more tax on the first payment they made.

Instead you're paying £17.50/month extra for the next 12 months.