Employee Tax Codes

Kate6669

I am a small business employer with approx 25+ employees.  Over the last year HMRC are constantly changing their tax codes for no reason. Each employee is entitled to the code 1257L unless they have more than one job or on marriage allowance etc, So I don't understand why the tax codes get changes randomly and sometimes several times for one person. They call HMRC each time and every time it gets changed back to 1257L.  I have just had a note from HMRC telling me they are changing more again for the next tax year April 25/26. One is for a 16yr old and they have changed hers from 1257L to BR (basic rate) why? Just because she doesn't earn huge amounts she is still entitled to 1257L? 
Another more senior staff member has had hers changed twice in the last two months, once to 1144 - she called them and they changed it back to 1257. Now they are telling me they're changing it to 1195 from April. But her circumstances haven't changed so there is no reason for this to be changed again.
One person who works between my two businesses, so his tax code is split between the two, 500L on one and 757L on the other. But when he first called them to ask for this to be done they stated they didn't have him registered as working for one of the businesses, this is despite being with us for over a year and receiving wage slips and a P60 from HMRC??? They couldn't find him on their system!! I had to speak to them on his behalf and give them all the info on the P60 to put on their system. A P60 they would have issued!!!
Every person is entitled to a tax code of 1257L regardless of how much they earn over the year? Unless (as previously stated) they more than one job or they have a special circumstance. 
Does anyone else have this problem with HMRC? 
My staff are constantly having to call them to change their tax codes back again. Or they go online and change it back. But I do feel it's better if they call and actually speak to someone to ask why it was changed. 9/10 they're told they don't know why!!! Every call takes around an hour to even get through to someone as well. So it's not an easy task, probably made to be like that so we give up and don't call. 

I am beginning to think there is a 'post office scandel' type thing going in here??  

I am very interested to know if anyone else has had this issue or any kind of issue with HMRC regarding tax codes. Also If Martin Lewis himself see's this - can you help me to understand this or why they do it? 
Thanks
Kate

DE_612183

Do your employees have variable salary each month?

Also what "Tax Basis" are you using?

This info might help work out why this is happening.

HMRC have a set of rules that apply tax codes based on the info they have, so I assume something is triggering the tax code changes - we just have to work out what it is - then when you tell HMRC next you can change the data that is causing the issue.

As an aside - do you have an accountant? - What do they say?

Do you use a payroll provider - if so which one - and what do they say?

Ayr_Rage

Those with savings interest above the relevant thresholds may have their codes changed to recover unpaid tax.

That's hardly a "special circumstance" and as you don't know what else is going on in their lives all you need to do is apply the codes and let them contact HMRC if they believe it to be incorrect.

Quite frankly you thinking there's some kind of scandal going on is laughable.

tizerbelle

Kate6669 said:

...this is despite being with us for over a year and receiving wage slips and a P60 from HMRC??? They couldn't find him on their system!! I had to speak to them on his behalf and give them all the info on the P60 to put on their system. A P60 they would have issued!!!

HMRC do not issue P60's.  P60's are a tax year end certificate that is issued by the employer.   

Grumpy_chap

Kate6669 said:

I am a small business employer with approx 25+ employees.  Over the last year HMRC are constantly changing their tax codes for no reason. Each employee is entitled to the code 1257L unless they have more than one job or on marriage allowance etc, So I don't understand why the tax codes get changes randomly and sometimes several times for one person. They call HMRC each time and every time it gets changed back to 1257L.  I have just had a note from HMRC telling me they are changing more again for the next tax year April 25/26. One is for a 16yr old and they have changed hers from 1257L to BR (basic rate) why? Just because she doesn't earn huge amounts she is still entitled to 1257L? 
Another more senior staff member has had hers changed twice in the last two months, once to 1144 - she called them and they changed it back to 1257. Now they are telling me they're changing it to 1195 from April. But her circumstances haven't changed so there is no reason for this to be changed again.
One person who works between my two businesses, so his tax code is split between the two, 500L on one and 757L on the other. But when he first called them to ask for this to be done they stated they didn't have him registered as working for one of the businesses, this is despite being with us for over a year and receiving wage slips and a P60 from HMRC??? They couldn't find him on their system!! I had to speak to them on his behalf and give them all the info on the P60 to put on their system. A P60 they would have issued!!!
Every person is entitled to a tax code of 1257L regardless of how much they earn over the year? Unless (as previously stated) they more than one job or they have a special circumstance. 
Does anyone else have this problem with HMRC? 
My staff are constantly having to call them to change their tax codes back again. Or they go online and change it back. But I do feel it's better if they call and actually speak to someone to ask why it was changed. 9/10 they're told they don't know why!!! Every call takes around an hour to even get through to someone as well. So it's not an easy task, probably made to be like that so we give up and don't call. 

I am beginning to think there is a 'post office scandel' type thing going in here??  

I am very interested to know if anyone else has had this issue or any kind of issue with HMRC regarding tax codes. Also If Martin Lewis himself see's this - can you help me to understand this or why they do it? 
Thanks
Kate

How do you know what tax code your employees should have?
You know what income they receive from the employment with your company.
The individuals may have any number of reasons why their tax code varies from the basic personal allowance, including:

• tax correction from previous years being collected via code
• marriage allowance 
• interest
• BTL
• pension
• other employment
• taxable benefits income
• allowable work-related expenses that are not reimbursed via your company
• gift aid

Really, as the employer all you need to do is apply the tax codes as advised to you by HMRC.

It is for the employees to contact HMRC and correct any errors in the data held if that is resulting in incorrect tax codes being issued.
In fact, I am surprised that HMRC were willing to talk to you (as the employer) about the individual employee's tax code notices, especially as this is a potential GDPR issue.  Some employees may have tax affairs they would prefer you not to know about.

It is quite possible that the frequent changes of tax code are a result of your contacting HMRC to "correct" the tax codes relating to your employees so a "corrected" standard allowance code is issued and then the HMRC system catches up and re-issues the correct tax code, which may now have changed from the original code if there is an adjustment required that needs to catch-up months of incorrect tax payments.

Sarahspangles

I think the only thing you need to do is act on the tax code change. Some/most of the changes will have nothing to do with their employer-employee relationship with your business.

We all have a Personal Tax Account. To sign up for access they need to go to the HMRC website or download the App. They will then be able to see what has triggered the change in their coding. 

Second jobs, or higher levels of savings interest are the sorts of things that will trigger a change.

Kate6669

Thanks all for your comments, I am fully aware that all I need to do is set the codes as per HMRC instruction. I just don't know why they keep changing them. As I have said in my original note every time the employee calls HMRC there is no reason for the change, they are all under the age of 40, only 2/3 are married, most are under the age of 25. But the one reason could be due to savings which I hadn't thought of. I know it's none of my business what code they are on, I only got involved because one staff member had been put on the incorrect tax code for two jobs and ended up having to pay a large tax bill to them. This hi-lighted the fact that they should all be keeping an eye on their own tax codes. Which tbh most of them don't even bother to read their wage slips (again not my problem I know) but as a caring Manager I have taken it upon myself to now make sure they are always on the correct codes. If anything changes I tell them and they deal with it themselves. But it is relentless which is why I asked the question. 

I agree my thoughts on it being a scandel are laughable - but hey I bet the post office workers thought the same thing at the time!!!! 

Bookworm105

at the end of the day you have no idea (no right) to info about the personal financial affairs of these individuals.
HMRC computers "think" they have info on sources of income other than what you pay them as your employee. As HMRC gets its info from many sources and a lot of the time has no idea if it is a one off or a recurring source then many times HMRC's first action is to extrapolate forward something that probably should not have been.

as a means of "dealing" with the public it has some merit as it forces people to react when they lose money to tax that they didn't understand would happen. 

i appreciate you say when challenged the codes are reverted to the basic full, but if HMRC does nothing then people would get away with underpaying.

penners324

Is your payroll system set up correctly? Is it making correct deductions and issuing RTI to HMRC correctly? If you submit twice for 1 period are you clicking on the 'late submission for good reason' tab?

If so then everything is fine. I'd suggest you recommend to your employees to get the HMRC app and they're own personal tax account. Then they can easily review the information.

For the employee working for 2 companies, it is possible that HMRC have a duplicate record for them. Your employee should ask this question to HMRC, use online chat service, it's easier to use. They'll need both companies hmrc Payroll reference.

Savvy_Sue

Kate6669 said:

Thanks all for your comments, I am fully aware that all I need to do is set the codes as per HMRC instruction. I just don't know why they keep changing them. As I have said in my original note every time the employee calls HMRC there is no reason for the change, they are all under the age of 40, only 2/3 are married, most are under the age of 25. But the one reason could be due to savings which I hadn't thought of. I know it's none of my business what code they are on, I only got involved because one staff member had been put on the incorrect tax code for two jobs and ended up having to pay a large tax bill to them. This hi-lighted the fact that they should all be keeping an eye on their own tax codes. Which tbh most of them don't even bother to read their wage slips (again not my problem I know) but as a caring Manager I have taken it upon myself to now make sure they are always on the correct codes. If anything changes I tell them and they deal with it themselves. But it is relentless which is why I asked the question. 

But actually, you can't do that. You can only point out to them that their code has changed, tell them the effect it will have (more / less tax to pay), and ask if they had their own notification. If they did, you can ask if it made sense to them, and if they did not then they need to log in and look at the notification. 

It's what I'm about to do for one of the employees of the small charity I help with payroll. I can't think of any reason why one of the youngsters should have their tax code reduced, but then I'm not their mum so why should I?