Tax code after leaving job

aroominyork

My wife left her job (ill health retirement) on 21 May. Her P45 is dated 1 July. Her income is now a state pension of £8613 and an NHS pension. HMRC Gateway shows that on 30 July the tax code for the job she left changed from 195LX to 395L and the code for her NHS pension changed from BRX to BR. Is this correct? Is there a time lag before the job she left drops off her tax code and her NHS pension takes on, presumably, the 395L tax code?

eskbanker

Tax codes are allocated per employer or pension provider and are only used to drive PAYE deductions, so I don't know why one would change after leaving a job, but I can't see that it would change anything.

However, in order to align deductions with income tax liabilities, it's straightforward to go onto her personal tax account and specify the expected income from each stream over the year, which should result in the most appropriate code being allocated to her pension, after which subsequent payments should self-correct.

aroominyork

I went to update her income on Gateway and it shows that she left the job on 21 May, so thinking it through it is saying the income she earned between 6 April-21 May used her spare allowance after allowing for her state pension, so it makes sense that her NHS pension through the year is taxed at BR.

chrisbur

Assuming just the two taxable incomes I would expect to see an allowance of 12570 to start with reduced by 8613 for the state pension to give 3957 or a tax code of 395L probably X..
Can you advise HMRC calculation to arrive at BR.

sheramber

It looks like HMRC  have not updated her codes for her leaving and have still allocated her  balance of allowances to her employment, although she has left.

Sate pension notification probably actioned automatically  without noting her ceasing employment or that notification has been noted on the record safter the tax code amendment.

A phone call to  HMRC ( phoning as soon as lines open is best) would sort it out.