Employer didnt pay PAYE while I was on furlough

Hi

I have received letters from HMRC which I thought might be a scam but contacting HMRC they seem legit.

During Covid I was put on furlough.  I thought everything was good but the letters from HMRC are asking me to pay a few thousand in tax which they claim hasnt been paid.

I am a PAYE employee and my understanding is my employer had been taking care of income tax and NI via the normal PAYE process like they had done for all the years I have worked there.

I was not a full time worker and had variable hours worked each month so the employer estimated approximate earnings so it wasnt as easy as knowing I was being more than id expect.

Obviously thinking my tax was being paid I didnt put aside money to pay this bill so I am dropped in it quite a bit here.

Does anyone have any advice on how best to handle this. What are the employers obligations, are there options like a payment plan

Thanks for any advice


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Comments

  • lisyloo
    lisyloo Posts: 29,583
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    Did you get any payslips?
    did the employer actually deduct tax and NI from you?
  • comeandgo
    comeandgo Posts: 5,731
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    Did you take other employment while on furlough?  Do you have other taxable income?  I’m wondering if you have gone into 40% tax area and not had updated HMRC.
  • Thanks for your replies, bit more info below

    @lisyloo
    I do have payslips and looking back the employer has not taken deductions

    @comeandgo
    I have always had 2 part time jobs, one of them was furloughed and the other was not furloughed.  On the 2nd job I have payed paye but on the 1st job the employer didnt make any deductions.  Normally my PAYE deductions come off from both emplo
  • molerat
    molerat Posts: 31,701
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    Does the payslip show a tax code etc ?
  • eg may 21

    Employer 1 
    tax code = 705L
    NI code = A
    Tax Paid = 0
    NI Paid = 0

    Employer 2
    tax code = 1257L
    NI code = A
    PAYE Paid = 132.60
    NI Paid = 139.92
  • molerat
    molerat Posts: 31,701
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    edited 8 May 2023 at 10:30AM
    How much were you paid on that.  The problem is likely that the wrong tax code was used for some reason and the pay was not sufficient to deduct tax or NI - £588.26 for tax and £797 for NI - but all of that income was taxable.  You need to work out your total income for the year and check if what HMRC are requesting is accurate.  Are they asking you to pay a few £K or reducing your tax code by a few £K ?
  • lisyloo
    lisyloo Posts: 29,583
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    edited 8 May 2023 at 12:28PM
    How do you normally ensure you are paying the right amount of tax?
    you cannot rely on employers when you have 2 jobs because they don’t know your other income.
    you may not like the message so please don’t shoot the messenger but it’s your responsibility to pay the right amount of tax.
    when I had 2 sources of income I did this using self assessment.

    i think your going to find this is your responsibility.
    we can’t say whether the employer acted properly. They may have acted properly as they didn’t know about the other job.
    The bottom line is that you’ve received the money and not paid the correct amount of tax which is down to you because you have 2 jobs so the employers cannot do it for you when they don’t know know about the other jobs/income.

    your best bet is to keep communicating the HMRC and come up with a reasonable payment plan as you do owe this money.
    if you keep communicating with them and come up with a reasonable plan then all should work out well with no consequences.
    if you ignore or procrastinate then there could be fines and it could affect your ability to borrow in future.
    note if your payment plan is very low then expect to provide detailed information on outgoings. They may be able to give guidance but you MUST communicate if you don’t want to suffer consequences in future.

    as to the employer, you could report it but they may have acted properly without the info of your other income and it won’t affect the fact that you owe the money.

    if they’d deducted it then it would be a different matter but you have never paid this money that you owe and the responsibility when you have 2 jobs is yours.
    I’m afraid ignorance is not a defence - don’t shoot the messenger just trying to get it sorted.
  • Caz3121
    Caz3121 Posts: 15,534
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    eg may 21

    Employer 1 
    tax code = 705L
    NI code = A
    Tax Paid = 0
    NI Paid = 0

    Employer 2
    tax code = 1257L
    NI code = A
    PAYE Paid = 132.60
    NI Paid = 139.92
    if you still have 2 part time jobs you should also check your tax codes for the 22/23 and current tax years
    From above it appears you have a personal allowance on both employments which will result in underpaid tax.
    employer 2 used your full personal allowance so you should not have had a free allowance on employer 1 so all income should have had tax paid. Much will probably depend on what information you gave them when you started. eg whether your only job or an additional job.
    Should either have the allowance split over the 2 jobs or the allowance on one job and not on the other 
  • Dazed_and_C0nfused
    Dazed_and_C0nfused Posts: 13,157
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    edited 9 May 2023 at 7:14AM
    Hi

    I have received letters from HMRC which I thought might be a scam but contacting HMRC they seem legit.

    During Covid I was put on furlough.  I thought everything was good but the letters from HMRC are asking me to pay a few thousand in tax which they claim hasnt been paid.

    I am a PAYE employee and my understanding is my employer had been taking care of income tax and NI via the normal PAYE process like they had done for all the years I have worked there.

    I was not a full time worker and had variable hours worked each month so the employer estimated approximate earnings so it wasnt as easy as knowing I was being more than id expect.

    Obviously thinking my tax was being paid I didnt put aside money to pay this bill so I am dropped in it quite a bit here.

    Does anyone have any advice on how best to handle this. What are the employers obligations, are there options like a payment plan

    Thanks for any advice


    Now you have posted details of your tax codes I don't think this is a really furlough related or necessarily a mistake by that employer.

    You have received tax code allowances at both jobs which total well in excess of the standard Personal Allowance. 

    There could be a valid reason for that but it is quite likely that the furlough employer operated the code they had and didn't need to deduct any tax i.e. your earnings with them were less than your tax code allowances.

    It looks like the bigger question is why was the second employee operating the emergency tax code of 1257L when you had an existing job?

    Quite likely that something went wrong with the new starter declaration when you started that job and you are now being asked to pay the tax owed, albeit at a later date than you would normally pay it.

    You seem to be the beneficiary of an interest free loan from HMRC!

  • @Dazed_and_C0nfused
    @lisyloo
    @Caz3121

    @molerat

    Thank you all for your help above, I see what your saying and this is my mistake.  A bunch of other people at employer 1 had a similar issue and got letters which made me think my issue was furlough related but I agree with what your saying and I have missed a trick understanding that the 2 employers didnt have my tax codes correct and I think there might have been missed comms around my 2nd job.

    I used to have employer 2 with a BR tax code looking back which I understand was a 2nd job tax code but it looks like this was changed sometime in 2020 to the 1257L which employer 2 things was done via HMRC and the RTI integration with Xero but ill get that checked up to see where it went wrong.

    Ill reach out to HMRC as i now understand the issue and talk to them to see whats the best way to handle this and see if I can get a payment plan or a tax code adjustment
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