Can I reclaim tax and NI

quicksilverfox

I recently started my first job in November 2023, prior to that I was unemployed for around 1.5 years after graduating in 2022 and received universal credit during that time.

According to my P60 I received this week
my tax code is 1257L M1
Pay £9647.09 Tax £880.40
NIC £462.91

Am I right in believing since it is below the £12570 allowance I shouldn't have paid any tax, I'm not sure how NI is calculated and would appreciate any advice regarding any overpayment there too.

How do I go about reclaiming either of the two.

sammyjammy

Its unlikely you have overpaid NI as its calculated either weekly or monthly not by tax year.  You should get a tax refund automatically when your P60u is released.

[Deleted User]

sammyjammy said:

It’s unlikely you have overpaid NI as it’s calculated either weekly or monthly not by tax year.  You should get a tax refund automatically when your P60u is released.

There won’t be a P60U - P60s are only issued where there is a payment in the final week/month of the tax year. The op will have to wait for a HMRC review of 2023/24

sheramber

Your amount of UC received from April to November will be added to your earnings to calculate your income for the year.

When HMRC review your year's  figures they will issue any overpayment.

However, that will not be until later in the year, possibly after the summer.

Once you receive your P60 from your employer  you can contact HMRC to request  claim any repayment that might be due, 

Dazed_and_C0nfused

sheramber said:

Your amount of UC received from April to November will be added to your earnings to calculate your income for the year.

When HMRC review your year's  figures they will issue any overpayment.

However, that will not be until later in the year, possibly after the summer.

Once you receive your P60 from your employer  you can contact HMRC to request  claim any repayment that might be due, 

HMRC aren't interested in Universal Credit as it's a non taxable benefit.

https://www.gov.uk/income-tax/taxfree-and-taxable-state-benefits

Although it does beg the question why didn't the op tick statement A on the new starter declaration form 🤔

[Deleted User]

Dazed_and_C0nfused said:

sheramber said:

Your amount of UC received from April to November will be added to your earnings to calculate your income for the year.

When HMRC review your year's  figures they will issue any overpayment.

However, that will not be until later in the year, possibly after the summer.

Once you receive your P60 from your employer  you can contact HMRC to request  claim any repayment that might be due, 

HMRC aren't interested in Universal Credit as it's a non taxable benefit.

https://www.gov.uk/income-tax/taxfree-and-taxable-state-benefits

Although it does beg the question why didn't the op tick statement A on the new starter declaration form 🤔

Does one no longer receive a P45U when ceasing unemployment benefit ( if they even still exist)?

Dazed_and_C0nfused

[Deleted User] said:

Dazed_and_C0nfused said:

sheramber said:

Your amount of UC received from April to November will be added to your earnings to calculate your income for the year.

When HMRC review your year's  figures they will issue any overpayment.

However, that will not be until later in the year, possibly after the summer.

Once you receive your P60 from your employer  you can contact HMRC to request  claim any repayment that might be due, 

HMRC aren't interested in Universal Credit as it's a non taxable benefit.

https://www.gov.uk/income-tax/taxfree-and-taxable-state-benefits

Although it does beg the question why didn't the op tick statement A on the new starter declaration form 🤔

Does one no longer receive a P45U when ceasing unemployment benefit ( if they even still exist)?

Yes, you should get one.

But the op said they had been unemployed and claimed UC so wouldn't get a P45 as that's not a taxable benefit.

I was unemployed for around 1.5 years after graduating in 2022 and received universal credit during that time

sammyjammy

[Deleted User] said:

sammyjammy said:

It’s unlikely you have overpaid NI as it’s calculated either weekly or monthly not by tax year.  You should get a tax refund automatically when your P60u is released.

There won’t be a P60U - P60s are only issued where there is a payment in the final week/month of the tax year. The op will have to wait for a HMRC review of 2023/24

OP is/will be working in last week/month of tax year, they have been working since November.

Scot_39

quicksilverfox said:

I recently started my first job in November 2023, prior to that I was unemployed for around 1.5 years after graduating in 2022 and received universal credit during that time.

According to my P60 I received this week
my tax code is 1257L M1
Pay £9647.09 Tax £880.40
NIC £462.91

Am I right in believing since it is below the £12570 allowance I shouldn't have paid any tax, I'm not sure how NI is calculated and would appreciate any advice regarding any overpayment there too.

How do I go about reclaiming either of the two.

NI unlike tax is never cumulative - it is judged against the threshold(s) for the given week or month - which are arguably strictly how the thresholds are defined - weekly etc not annually - so there is no real concept of over and under paying.  Nothing to reclaim.

You were placed on one of the so called emergency tax codes. 

This forces tax to work in a kind of per period // similar way at the time as far as payroll run processing - but your actual allowance is and remains an annual one - and so any errors at year end - Like your £880 can be claimed back 

See
https://www.gov.uk/tax-codes/emergency-tax-codes


The 1257L M1 although the numeric figure agrees with the standard allowance - that M1 basis forces employers (and private / employer pension companies) to behave very differently from a standard 1257L cumulative tax code.

The M1 stands for month 1 - means your monthly pay was assessed repeatedly as a first month on zero history (prior pay and tax) basis - even annoyingly if the previous months only paid by same employer that tax year.  So each month pay simply judged  against just 1/12th of £12570 personal allowance.

So over the 5 months you have averaged c£1930 - and paid tax on the excess over £12570/12 = £1047.5  so 20% on circa £880 per month = £176 pm = £880 over the 5 months. 

Despite earning under the £12570 PA over the 5 of 12 months worked..

If you had been issued a cumulative tax code 1257L anytime between first and last - i.e. prior to Mar payroll, the excess could have been refunded automatically via payroll.

Essentially your total income to date is assessed against accumulated allowances - so by Mar total income vs total allowance.

https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye11090

You should however be placed on the cumulative code from April.

(The submission of an old P45 from a previous employer or even the right answer on a new starter questionaire from past agency payroll - will trigger HMRC to introduce a more normal cumulative basis tax code - but many do get stuck for a few months on emergency codes.)

You are now - unless asked to register and submit a full self assesment SA return - I suspect probably will be - in the more modern path - and have to wait for your P800 personal calculation (*) (or simple assesment notice) - for a refund - which should say you are owed the £880. 

See
https://www.gov.uk/tax-overpayments-and-underpayments

If you don't hear from HMRC by autumn I'd give them a ring.

You might want to ring just to make sure they have your contact details - and keep them upto date - you dont want to miss a letter telling you to reclaim that £880.

And/or it might be wise / helpful for future to register for online access to your personal tax account to monitor things like tax codes and p800 processing.

I used to get paper copies of all tax code changes - I used to get several per year - but mine changed recently - between jobs - with HMRC having duplicated (doubled) not deleted an employment allowance for an old job - and wasn't aware.  And current payroll are now on 4th code since Jan - 1st was default 1257L M1.

Hmrc should give you the option of immediately reclaiming the cash - once that calc process completed - at least I was able to request via on line account forms - or send a cheque.  I would always take the cash if owed. 

(Even used to pay when owed tax when filed SA.)



In summary

NI is as was paid.

Income Tax should sort itself out automatically by autumn.


Someone in payroll at firm might be able to explain process better face to face.

Dazed_and_C0nfused

Scot_39 said:

quicksilverfox said:

I recently started my first job in November 2023, prior to that I was unemployed for around 1.5 years after graduating in 2022 and received universal credit during that time.

According to my P60 I received this week
my tax code is 1257L M1
Pay £9647.09 Tax £880.40
NIC £462.91

Am I right in believing since it is below the £12570 allowance I shouldn't have paid any tax, I'm not sure how NI is calculated and would appreciate any advice regarding any overpayment there too.

How do I go about reclaiming either of the two.

NI unlike tax is never cumulative - it is judged against the threshold(s) for the given week or month - which are arguably strictly how the thresholds are defined - weekly etc not annually - so there is no real concept of over and under paying.  Nothing to reclaim.

You were placed on one of the so called emergency tax codes. 

This forces tax to work in a kind of per period // similar way at the time as far as payroll run processing - but your actual allowance is and remains an annual one - and so any errors at year end - Like your £880 can be claimed back 

See
https://www.gov.uk/tax-codes/emergency-tax-codes


The 1257L M1 although the numeric figure agrees with the standard allowance - that M1 basis forces employers (and private / employer pension companies) to behave very differently from a standard 1257L cumulative tax code.

The M1 stands for month 1 - means your monthly pay was assessed repeatedly as a first month on zero history (prior pay and tax) basis - even annoyingly if the previous months only paid by same employer that tax year.  So each month pay simply judged  against just 1/12th of £12570 personal allowance.

So over the 5 months you have averaged c£1930 - and paid tax on the excess over £12570/12 = £1047.5  so 20% on circa £880 per month = £176 pm = £880 over the 5 months. 

Despite earning under the £12570 PA over the 5 of 12 months worked..

If you had been issued a cumulative tax code 1257L anytime between first and last - i.e. prior to Mar payroll, the excess could have been refunded automatically via payroll.

Essentially your total income to date is assessed against accumulated allowances - so by Mar total income vs total allowance.

https://www.gov.uk/hmrc-internal-manuals/paye-manual/paye11090

You should however be placed on the cumulative code from April.

(The submission of an old P45 from a previous employer or even the right answer on a new starter questionaire from past agency payroll - will trigger HMRC to introduce a more normal cumulative basis tax code - but many do get stuck for a few months on emergency codes.)

You are now - unless asked to register and submit a full self assesment SA return - I suspect probably will be - in the more modern path - and have to wait for your P800 personal calculation (*) (or simple assesment notice) - for a refund - which should say you are owed the £880. 

See
https://www.gov.uk/tax-overpayments-and-underpayments

If you don't hear from HMRC by autumn I'd give them a ring.

You might want to ring just to make sure they have your contact details - and keep them upto date - you dont want to miss a letter telling you to reclaim that £880.

And/or it might be wise / helpful for future to register for online access to your personal tax account to monitor things like tax codes and p800 processing.

I used to get paper copies of all tax code changes - I used to get several per year - but mine changed recently - between jobs - with HMRC having duplicated (doubled) not deleted an employment allowance for an old job - and wasn't aware.  And current payroll are now on 4th code since Jan - 1st was default 1257L M1.

Hmrc should give you the option of immediately reclaiming the cash - once that calc process completed - at least I was able to request via on line account forms -  or give option to modify your future years tax code to repay it by year end.  I would always take the cash if owed. 

(Even used to pay when owed tax when filed SA.)

In summary

NI is as was paid.

Income Tax should sort itself out automatically by autumn.

Someone in payroll at firm might be able to explain process better face to face.

A good explanation, with one exception.

HMRC never refund a tax overpayment like this by an adjustment to the tax code of a later tax year.

Once the P800 calculation is issued the op will be able to transfer the refund into their bank account (via their Personal Tax Account).

And there is only one emergency tax code, 1257L.

[Deleted User]

sammyjammy said:

[Deleted User] said:

sammyjammy said:

It’s unlikely you have overpaid NI as it’s calculated either weekly or monthly not by tax year.  You should get a tax refund automatically when your P60u is released.

There won’t be a P60U - P60s are only issued where there is a payment in the final week/month of the tax year. The op will have to wait for a HMRC review of 2023/24

OP is/will be working in last week/month of tax year, they have been working since November.

Thats correct - the op will get a P60 from his current employer. Had he been receiving a taxable benefit prior to the employment (which we know wasn’t happening) he would not receive a P60U because one only receives a P60 from the source of income being paid at the tax year end. 

https://www.gov.uk/payroll-annual-reporting/give-employees-p60-form