Worried re income tax rebate followed by no tax due

rceebear

I have had an unexpected tax rebate and had no tax to pay for 2 months. This equates to having paid no income tax since July! I have worked a full time low wage job this financial year (and previous years) 1st for company A, until July, which was then taken over to become company B. Both are small businesses run by a single person that use the same online accountant. On my HMRC account I have complete records for income tax and NI contributions for both companies. Then last month (Oct) I got a tax rebate for the entire of the 1st 2 months tax at company B and paid no income tax for Oct. Then again no income tax for Nov either. NI contributions unaffected.

I don't understand what could cause this and am worried there has been an error and I will get a hefty tax bill. Boss at current company says the boss at the previous company was up to no good and believes this explains it. But if I have a complete HMRC record for this financial year how can this be?

Any thoughts/suggestions greatly appreciated.

chrisbur

Sounds like your new employer is using a cumulative code without the pay and tax details from your old employer.  Check your payslip to see your taxable pay to date.  Is this what you have earned in both employments or just the last employment.
EDIT  I am assuming similar earnings in both employments.

rceebear

@chrisbur thank you so much. Yes it looks like this is what has happened. The cumulative pay in this employment doesn’t include the previous employment. Do you know what I do I need to do about this? I’m very anxious to get this sorted to avoid a large tax bill, well larger than it already is! Thank you 

chrisbur

Did you get a P45 from old employer and if so what was in sections 6 and 7 Any X in section 6 on your part 1A?

I would also suggest you speak to your employer and explain that pay and tax from old employer has not been included in your payroll details is it possible that they were not included in the P45 or a P6 from HMRC.

rceebear

Sorry I forgot to say the old employer was in a mess at the end and we didn’t get a final payslip or P45. New employer is aware of the situation as they worked under the old employer before taking over the business. We did discuss the situation and was told all was ok and that HMRC had issued us new tax codes. We did get a tax rebate from the previous financial year with the old employer so perhaps they were just in a real mess with it all. The whole thing is boggling my mind somewhat. 

tealady

You can use online calculators to check if your tax is right.
Or you could notify the tax office of the problem and ask if they have records from your previous employer.
Last year I underpaid tax and was offered the choice of paying off as a lump sum or having my tax code adjusted.
Dont spend too much time worrying, ask the tax office for clarification would be my advice, you dont want this to ruin your Christmas.

chrisbur

With a new code HMRC would normally also issue the previous pay and tax details I would check with employer in case these have been missed by them.
If employer confirms no pay/tax on code notice advise HMRC what has happened.
If you want to know your tax position you will need to give details of last payslip from new employer and pay/tax details or best estimate from old employer.  On the limited details given so far you are almost certainly owing tax.

rceebear

HMRC definitely have complete record of my employment, pay and tax paid at previous employment as it is all there when I log in to my online HMRC account.

To update, employer contacted the person that payroll is outsourced to. They said we haven't reached our tax free allowance yet so that is why we haven't paid tax! Well that is not how it works, is it?? I've never known this to be the case. 

So when I exceed my allowance in this employment are they going to tax all my pay at 20%?

Employer doesn't understand how the payroll person has got this wrong. She doesn't seem convinced there is an error at all. I pressed the matter and employer has agreed to call HMRC about it. It isn't just me, there are at least 2 other impacted employees.

Unfortunately it doesn't look this it will be sorted for this months pay as we get paid 1st month. 

housebuyer143

rceebear said:

HMRC definitely have complete record of my employment, pay and tax paid at previous employment as it is all there when I log in to my online HMRC account.

To update, employer contacted the person that payroll is outsourced to. They said we haven't reached our tax free allowance yet so that is why we haven't paid tax! Well that is not how it works, is it?? I've never known this to be the case. 

So when I exceed my allowance in this employment are they going to tax all my pay at 20%?

Employer doesn't understand how the payroll person has got this wrong. She doesn't seem convinced there is an error at all. I pressed the matter and employer has agreed to call HMRC about it. It isn't just me, there are at least 2 other impacted employees.

Unfortunately it doesn't look this it will be sorted for this months pay as we get paid 1st month. 

Can't you work out how much tax you will owe using an online calculator and then how much you have paid and put the difference aside?
You either get a bill or they change your tax code next year to recover the money due.

penners324

It's likely a new tax code notice will be issued to recover the under paid tax before April.

Keep the excess you've received to 1 side so you're not short when it happens 

rceebear

When I got the first rebate I didn’t know there was an issue as we assumed it was to do with the previous employers mess. I’m on minimum wage and hours have been reduced lately so really hand to mouth unfortunately. At least the increase in minimum wage next year should help a bit to pay off the debt.