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Mistake by payroll department with Tax Code
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jem16
Posts: 19,598 Forumite


in Cutting tax
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.
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.
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.
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Comments
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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.
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?0 -
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.
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?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.0 -
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.
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?
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.2 -
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.
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.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?0 -
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.
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.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?
Rerunning payroll and making an additional payment is the obvious option but whether they will agree is another question!1 -
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.
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.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?
Rerunning payroll and making an additional payment is the obvious option but whether they will agree is another question!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?0 -
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.
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.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?
Rerunning payroll and making an additional payment is the obvious option but whether they will agree is another question!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?1 -
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.
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.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?
Rerunning payroll and making an additional payment is the obvious option but whether they will agree is another question!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?0 -
Nomunnofun1 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.
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.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?
Rerunning payroll and making an additional payment is the obvious option but whether they will agree is another question!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?0
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