Mistake by payroll department with Tax Code

jem16

I’m helping out a friend who has recently started to receive her state pension in June. Her tax code was changed to take the state pension into account and is 32LX. All correct so far.

Her June payslip correctly used the code and her payslip shows Tax Basis as Week1/Month1 so all good in June.

Unfortunately her July payslip shows just the 32L tax code and nothing in the Tax Basis column and she’s been hammered with tax that’s around 2.5 times higher than the previous month as they’ve obviously used it cumulatively instead of non-cumulatively. 

HMRC just told her she’s on the correct code and will stay on that till April 2026. This was before I worked out that they’re not using the code correctly.

So it seems that it’s payroll who has made the error. What’s the best way of correcting it now?  It’s been flagged up by a manager who has been in touch with Head Office as no longer an HR department to speak to.

MattMattMattUK

jem16 said:

I’m helping out a friend who has recently started to receive her state pension in June. Her tax code was changed to take the state pension into account and is 32LX. All correct so far.

Her June payslip correctly used the code and her payslip shows Tax Basis as Week1/Month1 so all good in June.

Unfortunately her July payslip shows just the 32L tax code and nothing in the Tax Basis column and she’s been hammered with tax that’s around 2.5 times higher than the previous month as they’ve obviously used it cumulatively instead of non-cumulatively. 

HMRC just told her she’s on the correct code and will stay on that till April 2026. This was before I worked out that they’re not using the code correctly.

So it seems that it’s payroll who has made the error. What’s the best way of correcting it now?  It’s been flagged up by a manager who has been in touch with Head Office as no longer an HR department to speak to.

Payroll do not set tax codes, they will only follow coding notices from HMRC.

The deductions sound correct. The state pension will be using up nearly all of her basic allowance, so pretty much all of her income from employment will be pushed up into the basic rate of tax (20%), the only difference is that your friend will no longer pay National Insurance.

What makes you think that they are not using the correct tax code?

jem16

MattMattMattUK said:

jem16 said:

I’m helping out a friend who has recently started to receive her state pension in June. Her tax code was changed to take the state pension into account and is 32LX. All correct so far.

Her June payslip correctly used the code and her payslip shows Tax Basis as Week1/Month1 so all good in June.

Unfortunately her July payslip shows just the 32L tax code and nothing in the Tax Basis column and she’s been hammered with tax that’s around 2.5 times higher than the previous month as they’ve obviously used it cumulatively instead of non-cumulatively. 

HMRC just told her she’s on the correct code and will stay on that till April 2026. This was before I worked out that they’re not using the code correctly.

So it seems that it’s payroll who has made the error. What’s the best way of correcting it now?  It’s been flagged up by a manager who has been in touch with Head Office as no longer an HR department to speak to.

Payroll do not set tax codes, they will only follow coding notices from HMRC.

The deductions sound correct. The state pension will be using up nearly all of her basic allowance, so pretty much all of her income from employment will be pushed up into the basic rate of tax (20%), the only difference is that your friend will no longer pay National Insurance.

What makes you think that they are not using the correct tax code?

Yes I know they only use tax codes sent by HMRC. 

HMRC has sent a tax code of 32LX and that’s what was used correctly in June. In July the tax code used by payroll was 32L and no new coding notice from HMRC.

The deductions for June were correct as the X part of the code looked at that month in isolation as is meant to happen. The deductions for July are wrong as they deducted extra tax for April and May when she wasn’t receiving her state pension. This happened as the X part of her code wasn’t used.

Dazed_and_C0nfused

MattMattMattUK said:

jem16 said:

I’m helping out a friend who has recently started to receive her state pension in June. Her tax code was changed to take the state pension into account and is 32LX. All correct so far.

Her June payslip correctly used the code and her payslip shows Tax Basis as Week1/Month1 so all good in June.

Unfortunately her July payslip shows just the 32L tax code and nothing in the Tax Basis column and she’s been hammered with tax that’s around 2.5 times higher than the previous month as they’ve obviously used it cumulatively instead of non-cumulatively. 

HMRC just told her she’s on the correct code and will stay on that till April 2026. This was before I worked out that they’re not using the code correctly.

So it seems that it’s payroll who has made the error. What’s the best way of correcting it now?  It’s been flagged up by a manager who has been in touch with Head Office as no longer an HR department to speak to.

Payroll do not set tax codes, they will only follow coding notices from HMRC.

The deductions sound correct. The state pension will be using up nearly all of her basic allowance, so pretty much all of her income from employment will be pushed up into the basic rate of tax (20%), the only difference is that your friend will no longer pay National Insurance.

What makes you think that they are not using the correct tax code?

The tax code isn't the problem.  It is the basis on which it is being operated that is the issue.

When State Pension starts HMRC (correctly) usually include a full years worth of State Pension.  But tell the employer/pension payer to operate it on a non cumulative basis.

You wouldn't (shouldn't) use that tax code on a cumulative basis as that will mean a full years State Pension is taxed when it shouldn't be.

@jem16 I would say next step is to get the explanation from the payroll department.

jem16

Dazed_and_C0nfused said:

MattMattMattUK said:

jem16 said:

I’m helping out a friend who has recently started to receive her state pension in June. Her tax code was changed to take the state pension into account and is 32LX. All correct so far.

Her June payslip correctly used the code and her payslip shows Tax Basis as Week1/Month1 so all good in June.

Unfortunately her July payslip shows just the 32L tax code and nothing in the Tax Basis column and she’s been hammered with tax that’s around 2.5 times higher than the previous month as they’ve obviously used it cumulatively instead of non-cumulatively. 

HMRC just told her she’s on the correct code and will stay on that till April 2026. This was before I worked out that they’re not using the code correctly.

So it seems that it’s payroll who has made the error. What’s the best way of correcting it now?  It’s been flagged up by a manager who has been in touch with Head Office as no longer an HR department to speak to.

Payroll do not set tax codes, they will only follow coding notices from HMRC.

The deductions sound correct. The state pension will be using up nearly all of her basic allowance, so pretty much all of her income from employment will be pushed up into the basic rate of tax (20%), the only difference is that your friend will no longer pay National Insurance.

What makes you think that they are not using the correct tax code?

@jem16 I would say next step is to get the explanation from the payroll department.

Yes that’s been requested and will be followed up next week if still no reply. 

Can this be sorted by payroll with them correcting their mistake or is she stuck with this underpayment due to them using the incorrect tax basis?

Dazed_and_C0nfused

jem16 said:

Dazed_and_C0nfused said:

MattMattMattUK said:

jem16 said:

I’m helping out a friend who has recently started to receive her state pension in June. Her tax code was changed to take the state pension into account and is 32LX. All correct so far.

Her June payslip correctly used the code and her payslip shows Tax Basis as Week1/Month1 so all good in June.

Unfortunately her July payslip shows just the 32L tax code and nothing in the Tax Basis column and she’s been hammered with tax that’s around 2.5 times higher than the previous month as they’ve obviously used it cumulatively instead of non-cumulatively. 

HMRC just told her she’s on the correct code and will stay on that till April 2026. This was before I worked out that they’re not using the code correctly.

So it seems that it’s payroll who has made the error. What’s the best way of correcting it now?  It’s been flagged up by a manager who has been in touch with Head Office as no longer an HR department to speak to.

Payroll do not set tax codes, they will only follow coding notices from HMRC.

The deductions sound correct. The state pension will be using up nearly all of her basic allowance, so pretty much all of her income from employment will be pushed up into the basic rate of tax (20%), the only difference is that your friend will no longer pay National Insurance.

What makes you think that they are not using the correct tax code?

@jem16 I would say next step is to get the explanation from the payroll department.

Yes that’s been requested and will be followed up next week if still no reply. 

Can this be sorted by payroll with them correcting their mistake or is she stuck with this underpayment due to them using the incorrect tax basis?

Assuming it is a payroll error then I think the ones would be on them to work out how to correct.

Rerunning payroll and making an additional payment is the obvious option but whether they will agree is another question!

jem16

Dazed_and_C0nfused said:

jem16 said:

Dazed_and_C0nfused said:

MattMattMattUK said:

jem16 said:

I’m helping out a friend who has recently started to receive her state pension in June. Her tax code was changed to take the state pension into account and is 32LX. All correct so far.

Her June payslip correctly used the code and her payslip shows Tax Basis as Week1/Month1 so all good in June.

Unfortunately her July payslip shows just the 32L tax code and nothing in the Tax Basis column and she’s been hammered with tax that’s around 2.5 times higher than the previous month as they’ve obviously used it cumulatively instead of non-cumulatively. 

HMRC just told her she’s on the correct code and will stay on that till April 2026. This was before I worked out that they’re not using the code correctly.

So it seems that it’s payroll who has made the error. What’s the best way of correcting it now?  It’s been flagged up by a manager who has been in touch with Head Office as no longer an HR department to speak to.

Payroll do not set tax codes, they will only follow coding notices from HMRC.

The deductions sound correct. The state pension will be using up nearly all of her basic allowance, so pretty much all of her income from employment will be pushed up into the basic rate of tax (20%), the only difference is that your friend will no longer pay National Insurance.

What makes you think that they are not using the correct tax code?

@jem16 I would say next step is to get the explanation from the payroll department.

Yes that’s been requested and will be followed up next week if still no reply. 

Can this be sorted by payroll with them correcting their mistake or is she stuck with this underpayment due to them using the incorrect tax basis?

Assuming it is a payroll error then I think the ones would be on them to work out how to correct.

Rerunning payroll and making an additional payment is the obvious option but whether they will agree is another question!

Hopefully they will see sense and do so. 

If however they do no, is it worth contacting HMRC and explaining what has happened and asking them to issue a different cumulative code that will only take account of the state pension paid from June to April as opposed to the normal whole year used non-cumulatively?

Isthisforreal99

jem16 said:

Dazed_and_C0nfused said:

jem16 said:

Dazed_and_C0nfused said:

MattMattMattUK said:

jem16 said:

I’m helping out a friend who has recently started to receive her state pension in June. Her tax code was changed to take the state pension into account and is 32LX. All correct so far.

Her June payslip correctly used the code and her payslip shows Tax Basis as Week1/Month1 so all good in June.

Unfortunately her July payslip shows just the 32L tax code and nothing in the Tax Basis column and she’s been hammered with tax that’s around 2.5 times higher than the previous month as they’ve obviously used it cumulatively instead of non-cumulatively. 

HMRC just told her she’s on the correct code and will stay on that till April 2026. This was before I worked out that they’re not using the code correctly.

So it seems that it’s payroll who has made the error. What’s the best way of correcting it now?  It’s been flagged up by a manager who has been in touch with Head Office as no longer an HR department to speak to.

Payroll do not set tax codes, they will only follow coding notices from HMRC.

The deductions sound correct. The state pension will be using up nearly all of her basic allowance, so pretty much all of her income from employment will be pushed up into the basic rate of tax (20%), the only difference is that your friend will no longer pay National Insurance.

What makes you think that they are not using the correct tax code?

@jem16 I would say next step is to get the explanation from the payroll department.

Yes that’s been requested and will be followed up next week if still no reply. 

Can this be sorted by payroll with them correcting their mistake or is she stuck with this underpayment due to them using the incorrect tax basis?

Assuming it is a payroll error then I think the ones would be on them to work out how to correct.

Rerunning payroll and making an additional payment is the obvious option but whether they will agree is another question!

Hopefully they will see sense and do so. 

If however they do no, is it worth contacting HMRC and explaining what has happened and asking them to issue a different cumulative code that will only take account of the state pension paid from June to April as opposed to the normal whole year used non-cumulatively?

That was going to be my suggestion if payroll cannot undo their mistake, actual state pension on a cumulative basis which would mean correct tax paid going forward.

[Deleted User]

jem16 said:

Dazed_and_C0nfused said:

jem16 said:

Dazed_and_C0nfused said:

MattMattMattUK said:

jem16 said:

I’m helping out a friend who has recently started to receive her state pension in June. Her tax code was changed to take the state pension into account and is 32LX. All correct so far.

Her June payslip correctly used the code and her payslip shows Tax Basis as Week1/Month1 so all good in June.

Unfortunately her July payslip shows just the 32L tax code and nothing in the Tax Basis column and she’s been hammered with tax that’s around 2.5 times higher than the previous month as they’ve obviously used it cumulatively instead of non-cumulatively. 

HMRC just told her she’s on the correct code and will stay on that till April 2026. This was before I worked out that they’re not using the code correctly.

So it seems that it’s payroll who has made the error. What’s the best way of correcting it now?  It’s been flagged up by a manager who has been in touch with Head Office as no longer an HR department to speak to.

Payroll do not set tax codes, they will only follow coding notices from HMRC.

The deductions sound correct. The state pension will be using up nearly all of her basic allowance, so pretty much all of her income from employment will be pushed up into the basic rate of tax (20%), the only difference is that your friend will no longer pay National Insurance.

What makes you think that they are not using the correct tax code?

@jem16 I would say next step is to get the explanation from the payroll department.

Yes that’s been requested and will be followed up next week if still no reply. 

Can this be sorted by payroll with them correcting their mistake or is she stuck with this underpayment due to them using the incorrect tax basis?

Assuming it is a payroll error then I think the ones would be on them to work out how to correct.

Rerunning payroll and making an additional payment is the obvious option but whether they will agree is another question!

Hopefully they will see sense and do so. 

If however they do no, is it worth contacting HMRC and explaining what has happened and asking them to issue a different cumulative code that will only take account of the state pension paid from June to April as opposed to the normal whole year used non-cumulatively?

That’s a sensible suggestion. More sensible would be if the employer showed some flexibility and operated the tax code on the basis issued by HMRC. Or is so doing and issuing a revised submission to HMRC been sent to the ‘too difficult’ box?

jem16

[Deleted User] said:

jem16 said:

Dazed_and_C0nfused said:

jem16 said:

Dazed_and_C0nfused said:

MattMattMattUK said:

jem16 said:

I’m helping out a friend who has recently started to receive her state pension in June. Her tax code was changed to take the state pension into account and is 32LX. All correct so far.

Her June payslip correctly used the code and her payslip shows Tax Basis as Week1/Month1 so all good in June.

Unfortunately her July payslip shows just the 32L tax code and nothing in the Tax Basis column and she’s been hammered with tax that’s around 2.5 times higher than the previous month as they’ve obviously used it cumulatively instead of non-cumulatively. 

HMRC just told her she’s on the correct code and will stay on that till April 2026. This was before I worked out that they’re not using the code correctly.

So it seems that it’s payroll who has made the error. What’s the best way of correcting it now?  It’s been flagged up by a manager who has been in touch with Head Office as no longer an HR department to speak to.

Payroll do not set tax codes, they will only follow coding notices from HMRC.

The deductions sound correct. The state pension will be using up nearly all of her basic allowance, so pretty much all of her income from employment will be pushed up into the basic rate of tax (20%), the only difference is that your friend will no longer pay National Insurance.

What makes you think that they are not using the correct tax code?

@jem16 I would say next step is to get the explanation from the payroll department.

Yes that’s been requested and will be followed up next week if still no reply. 

Can this be sorted by payroll with them correcting their mistake or is she stuck with this underpayment due to them using the incorrect tax basis?

Assuming it is a payroll error then I think the ones would be on them to work out how to correct.

Rerunning payroll and making an additional payment is the obvious option but whether they will agree is another question!

Hopefully they will see sense and do so. 

If however they do no, is it worth contacting HMRC and explaining what has happened and asking them to issue a different cumulative code that will only take account of the state pension paid from June to April as opposed to the normal whole year used non-cumulatively?

That’s a sensible suggestion. More sensible would be if the employer showed some flexibility and operated the tax code on the basis issued by HMRC. Or is so doing and issuing a revised submission to HMRC been sent to the ‘too difficult’ box?

Waiting to hear from the employer next week as my friend is off work this week. 

jem16

So fa the totally useless reply from payroll is that they cannot change the tax code. My friend has told them she isn’t asking for them to change the tax code, just for them to have used it correctly. 

I suspect this will go to HMRC and see if they can sort it with a new cumulative tax code based on actual state pension accrued rather than a whole year non-cumulatively.