Tax Code 21T M1

canarydan

Hi all.

HMRC have put me on a 21T M1 tax code and I'm not entirely sure why.

For context, I have a basic salary of £43,750 but in March 22 the company I worked for and had a 5% stake in was bought out and I was TUPEd across.

As part of the deal, there is an earn-out whereby I receive 1.5% of the business unit's revenue, paid as PAYE every quarter. I'm now in the 4th year of this 5 year out but this is the first time HMRC have ever done anything like this with me.

April was a commission month so I received a higher amount, but May and June were ordinary pay months, so I should have received the same take-home pay (as I have been throughout the earn out). However, I received £426.00 less in take home pay in June's pay packet as I did in May. Looking at my year to date totals, I have definitely overpaid tax. Why would they do that? My tax account says they have put me on 21T to avoid me paying too much tax, when the actual outcome is the complete opposite. I'm sure they'll say it will come out in the wash, but it's not easy for budgeting to have such wild and unexpected variation in your income.

canarydan

I've just been doing some digging in my tax account and it has massively overestimated my PAYE earnings, presumably it's extrapolated my heightened April pay across the year which I can understand (despite the fact that my earning pattern has been the same for over three years). However, they've stuck a non-code income amount of £52,000. Why on earth would they do that?

molerat

https://www.gov.uk/guidance/tell-hmrc-about-a-change-to-youremployment-income

Using the HMRC online service

1. Sign in to HMRC online services.
2. Go to the ‘Pay As You Earn (PAYE)’ section.
3. Select ‘check current tax year’ to view your PAYE Income Tax Summary for 6 April to 5 April.
4. To update your estimated income select ‘view or update employment details’ and ‘update your estimated taxable income’.
5. To tell us about missing income select ‘update or remove’ in the ‘Non coded income’ section.

Not sure if that would work, if not you need to speak to them.  They often get crossed lines so if all your income is through the same single PAYE source and is under £100K they should not have adjusted anything.

canarydan

I can see the option to remove it, I'm just wondering where on earth they got an indication that I would be receiving any non coded income, never mind such a large sum.

Hoenir

canarydan said:

 I'm sure they'll say it will come out in the wash, but it's not easy for budgeting to have such wild and unexpected variation in your income.

With variable quarterly income there's nothing the HMRC can do to assist with your budgeting.  The PAYE system is what it is. 

canarydan

Hoenir said:

canarydan said:

 I'm sure they'll say it will come out in the wash, but it's not easy for budgeting to have such wild and unexpected variation in your income.

With variable quarterly income there's nothing the HMRC can do to assist with your budgeting.  The PAYE system is what it is. 

They've managed it the last three years without any issue. There has been a swing of few quid here and there, but never over £400 in a single month's pay. It's going to be around the random non-coded income they've bizarrely attributed to me. I've called them twice today, waited around 25 minutes both times and both times got through to a call handler and been cut off. Absolute shower of b*******.

Hoenir

canarydan said:

Hoenir said:

canarydan said:

 I'm sure they'll say it will come out in the wash, but it's not easy for budgeting to have such wild and unexpected variation in your income.

With variable quarterly income there's nothing the HMRC can do to assist with your budgeting.  The PAYE system is what it is. 

They've managed it the last three years without any issue. There has been a swing of few quid here and there, but never over £400 in a single month's pay. It's going to be around the random non-coded income they've bizarrely attributed to me. I've called them twice today, waited around 25 minutes both times and both times got through to a call handler and been cut off. Absolute shower of b*******.

Have you checked your Online Personal tax account? 

sheramber

What does your personal tax account show as your estimated income for the year?

Dazed_and_C0nfused

canarydan said:

I've just been doing some digging in my tax account and it has massively overestimated my PAYE earnings, presumably it's extrapolated my heightened April pay across the year which I can understand (despite the fact that my earning pattern has been the same for over three years). However, they've stuck a non-code income amount of £52,000. Why on earth would they do that?

Stuck it where?  Non coded income can't be included in your tax code.

Have you ever completed a Self Assessment return?