Wrong tax code on payslip

Jimeji

HMRC sent me a new tax code a while back. I have noticed that a different tax code appears on my payslips. I also seem to be paying an excessive amount of tax (which I assume I will be entitled to a refund once this issue is resolved).

Who has made an error here - the employer for not updating for the tax code, or HMRC for not passing through on PAYE?

Dazed_and_C0nfused

The most likely answer is that your employer won't have used the tax code HMRC have issued.

But it's always possible your employer will not have received (or claim to have not received it).

Are you confident the tax code HMRC have calculated is actually correct (just because HMRC have calculated if doesn't mean it is 100% bound to be correct).

What are the two different codes?

Jimeji

Dazed_and_C0nfused said:

The most likely answer is that your employer won't have used the tax code HMRC have issued.

But it's always possible your employer will not have received (or claim to have not received it).

Are you confident the tax code HMRC have calculated is actually correct (just because HMRC have calculated if doesn't mean it is 100% bound to be correct).

What are the two different codes?

Thanks for the response. 844L is provided by HMRC, but K344 is on the payslip.

I am paying much more tax than I usually would. Nearly 1/3 of my earnings and I'm not a big earner by any accounts. This is in turn causing us financial challenges.

Dazed_and_C0nfused

Have you checked the breakdown of how your tax code is calculated on your Personal Tax Account?

844L to K344 is a large difference and could mean around £200/month extra tax is being deducted.

I would say the first step is to check your tax code breakdown to see if you actually agree that 844L is correct.

MalMonroe

You could also contact HMRC online via your personal tax account. If you don't have one, it's really easy to register.

Before I retired I never used to bother too much about tax codes and trusted that HMRC always got things right and never made mistakes. As soon as I retired, everything went haywire and they were deducting tax from my income - which didn't even reach the personal tax allowance. I phoned, I wrote, I tore my hair out and it took months before they finally understood and applied the correct tax codes (I have to have two because I have two tiny private pensions as well as state pension) and a refund was issued. I also discovered that I wasn't the only one that had happened to and they'd made a big mess of many pensions at that time. 

HMRC do get things wrong. And of course, their computer systems develop faults.

Now every year they still get things wrong because they don't change one of the tax codes when my pensions increase slightly and I'm back to square one, where they are taking tax I don't earn enough to pay again. The good thing about all this is that I now understand how tax codes work. And I know to keep an eye on my tax codes. I still have to send them a message each April/May time to let them know that the tax code needs changing. 

In my experience it's always been HMRC who have made the mistake. In my case, the pension provider who is always given the incorrect code just takes off the tax as instructed. They're not allowed to do anything else.

With the new financial year having begun in April, do you think that's when the different tax code was applied?  It can be sorted but if you contact HMRC sooner rather than later things won't drag on.

Jimeji

Dazed_and_C0nfused said:

Have you checked the breakdown of how your tax code is calculated on your Personal Tax Account?

844L to K344 is a large difference and could mean around £200/month extra tax is being deducted.

I would say the first step is to check your tax code breakdown to see if you actually agree that 844L is correct.

I think HMRC have got it right in this case, so I just need my payslip to have the correct taxcode.

If it is agreed that I am overpaying tax, how is it paid back - ASAP through bank transfer, at the end of the tax year through bank transfer or through tax reduction in coming months?

Jimeji

MalMonroe said:

You could also contact HMRC online via your personal tax account. If you don't have one, it's really easy to register.

Before I retired I never used to bother too much about tax codes and trusted that HMRC always got things right and never made mistakes. As soon as I retired, everything went haywire and they were deducting tax from my income - which didn't even reach the personal tax allowance. I phoned, I wrote, I tore my hair out and it took months before they finally understood and applied the correct tax codes (I have to have two because I have two tiny private pensions as well as state pension) and a refund was issued. I also discovered that I wasn't the only one that had happened to and they'd made a big mess of many pensions at that time. 

HMRC do get things wrong. And of course, their computer systems develop faults.

Now every year they still get things wrong because they don't change one of the tax codes when my pensions increase slightly and I'm back to square one, where they are taking tax I don't earn enough to pay again. The good thing about all this is that I now understand how tax codes work. And I know to keep an eye on my tax codes. I still have to send them a message each April/May time to let them know that the tax code needs changing. 

In my experience it's always been HMRC who have made the mistake. In my case, the pension provider who is always given the incorrect code just takes off the tax as instructed. They're not allowed to do anything else.

With the new financial year having begun in April, do you think that's when the different tax code was applied?  It can be sorted but if you contact HMRC sooner rather than later things won't drag on.

I will see if my employeer can help initially, but will also try and attempt to contact HMRC. I did try yesterday but it proved impossible to get through!

I do have a tax account on gov.uk, and the projected tax payment for this tax year is much lower than I am currently paying. There is a major error in the amount I am currently paying and it is impacting my life.

Dazed_and_C0nfused

Jimeji said:

Dazed_and_C0nfused said:

Have you checked the breakdown of how your tax code is calculated on your Personal Tax Account?

844L to K344 is a large difference and could mean around £200/month extra tax is being deducted.

I would say the first step is to check your tax code breakdown to see if you actually agree that 844L is correct.

I think HMRC have got it right in this case, so I just need my payslip to have the correct taxcode.

If it is agreed that I am overpaying tax, how is it paid back - ASAP through bank transfer, at the end of the tax year through bank transfer or through tax reduction in coming months?

It is through your wages.

The first time you're paid and the new tax code is used your tax will be recalculated and any adjustment reflected in that pay i.e. your take home pay will be more.

p00hsticks

MalMonroe said:

You could also contact HMRC online via your personal tax account. If you don't have one, it's really easy to register.

Providing, of course, that you have the passport, P60 and/or Northern Ireland Driving Licence to get you through the initial Government Gateway ID checks (as discussed elsewhere)

sheramber

Check with your employer whether he has received the nes code number.

If not, then contact HMRC and advise them your employer has not received the code number and they will issue it again.

t is best to phone as soon as lines open to avoid the long queues.

Jimeji

Just to update on this, I finally got through to HMRC on the phone and they have updated my tax code to 1257L. They will inform my employer and hopefully the tax will be corrected in time for the next pay at the end of June.

Thanks for everyone's advice.