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PILON and new job | Tax position.

Hi all,
Hoping someone with knowledge of the PAYE/Tax system can advise here.

Timeline:
18th Jan - Confirmation of redundancy and last working day. PILON payment to follow.
21st Jan - Started new job with different company.
26th Jan - Previous full months pay from old job due. (Is paid 4 weekly, 2 weeks behind).
23rd Feb - Final week’s pay from old job, outstanding holiday etc, PILON and Redundancy due. P45 issued at this point.
23rd Feb - 1st Salary payment from NEW job also due.

I’ve filled in New Starter Form for new job, in absence of P45, as technically I am no longer employed by old company . . . even though I’ve still got two more pay cycles to come.

Expecting to be rinsed in tax, as I would assume the system would effectively think I have two jobs; however my question is, what calculation can I use to have an idea of what I expect come 23rd Feb.

Hope that makes sense. Thanks in advance.

Comments

  • chrisbur
    chrisbur Posts: 4,149 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    What option did you select on the new starter form?

  • TommyAV
    TommyAV Posts: 9 Forumite
    Tenth Anniversary Combo Breaker Name Dropper First Post
    @chrisbur that I have had previous employment this tax year. 
  • chrisbur
    chrisbur Posts: 4,149 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    You should be taxed on the emergency tax code of 1257L applied on a non-cumulative basis.  That means you will get an allowance of approx. 1048 if monthly paid then taxed 20% then higher rate if earnings high enough.
    Your old employer will almost certainly still be using your normal tax code on a cumulative basis so will also be giving you a tax free allowance and 20% tax band allowance ( then 40% etc if earnings high enough to go into higher rate tax).
    Result is you will not have paid enough tax.  This under payment will be adjusted when your new employer adds the P45 figures to your pay record.  I have known it happen that HMRC pick this up and issue a code which will spread the under payment over the remainder of the tax year so that it is not all taken at once but I do not know if this always happens. 
  • penners324
    penners324 Posts: 3,112 Forumite
    Fifth Anniversary 1,000 Posts Name Dropper
    You're likely to underpay tax in February. Then catch up in March
  • Dazed_and_C0nfused
    Dazed_and_C0nfused Posts: 15,108 Forumite
    10,000 Posts Fourth Anniversary Name Dropper
    You're likely to underpay tax in February. Then catch up in March
    Although as it's very late in the tax year it's possible that the estimated tax owed would be included in the following year's tax code rather than the current year's code?

    https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye11060
  • TommyAV
    TommyAV Posts: 9 Forumite
    Tenth Anniversary Combo Breaker Name Dropper First Post
    Thanks all.
    I was expecting it to be deducting massively, with effectively two pay packets due, turns out it’s not so bad. 😊 
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