Overpaid Tax - how to get it back

molerat

Back of a fag packet calculation

Tax due on £46630 = £6810 + £1134 owed from last year = £7944 due

Tax paid on job to date £6630

Tax paid on pension to date £3110

Total tax paid to date £9740

Total tax paid on pension of £13320 by end of year £1080 = £2030 refund

£9740 - £2030 = £7710  paid

Pat38493

molerat said:

Back of a fag packet calculation

Tax due on £46630 = £6810 + £1134 owed from last year = £7944 due

Tax paid on job to date £6630

Tax paid on pension to date £3110

Total tax paid to date £9740

Total tax paid on pension of £13320 by end of year £1080 = £2030 refund

£9740 - £2030 = £7710  paid

OK so you are saying that the current tax code they have allocated will actually give the correct results (or pretty close)?

Pat38493

Dazed_and_C0nfused said:

If they have a cumulative tax code and the previous earnings (and tax paid) details your pension company can make tax refunds as part of your pension payments, just like an employer can.

You really need to check with HMRC if they have told the pension company about your previous earnings. If not you might be in a much worse position than you expected.

I'm a bit confused by that because my understanding was that the pension provider is obliged to use the tax code provided by HMRC for payroll, regardless of anything they know about past employments?  Wouldn't that only be relevant if HMRC had not yet given a tax code?

chrisbur

Pat38493 said:

Dazed_and_C0nfused said:

If they have a cumulative tax code and the previous earnings (and tax paid) details your pension company can make tax refunds as part of your pension payments, just like an employer can.

You really need to check with HMRC if they have told the pension company about your previous earnings. If not you might be in a much worse position than you expected.

I'm a bit confused by that because my understanding was that the pension provider is obliged to use the tax code provided by HMRC for payroll, regardless of anything they know about past employments?  Wouldn't that only be relevant if HMRC had not yet given a tax code?

When the system works correctly and you leave one taxable income and still have another taxable income, HMRC will advise the payroll dept. for that second income what tax code to use and also your previous taxable pay and tax paid (ie the figures that show on your P45).  In that way the two are merged and as far as tax deductions are concerned they are now the same as if you had been on that payroll from the start of the tax year.  
Most payslips will have a section for this to show, either headed something like "pay in previous employment/tax in previous employment, Total taxable pay to date/tax paid to date or sometimes both.  If there are figures like that then these details have been given by HMRC.

Pat38493

chrisbur said:

Pat38493 said:

Dazed_and_C0nfused said:

If they have a cumulative tax code and the previous earnings (and tax paid) details your pension company can make tax refunds as part of your pension payments, just like an employer can.

You really need to check with HMRC if they have told the pension company about your previous earnings. If not you might be in a much worse position than you expected.

I'm a bit confused by that because my understanding was that the pension provider is obliged to use the tax code provided by HMRC for payroll, regardless of anything they know about past employments?  Wouldn't that only be relevant if HMRC had not yet given a tax code?

When the system works correctly and you leave one taxable income and still have another taxable income, HMRC will advise the payroll dept. for that second income what tax code to use and also your previous taxable pay and tax paid (ie the figures that show on your P45).  In that way the two are merged and as far as tax deductions are concerned they are now the same as if you had been on that payroll from the start of the tax year.  
Most payslips will have a section for this to show, either headed something like "pay in previous employment/tax in previous employment, Total taxable pay to date/tax paid to date or sometimes both.  If there are figures like that then these details have been given by HMRC.

Hmmm.... so does this mean I should also provide the parts 2 and 3 of my P45 "Copy for new employer" and "For Completion by new employer" to the pension provider (even though the pension was already in payment for 10 months prior to me leaving the employer)?

chrisbur

Pat38493 said:

chrisbur said:

Pat38493 said:

Dazed_and_C0nfused said:

If they have a cumulative tax code and the previous earnings (and tax paid) details your pension company can make tax refunds as part of your pension payments, just like an employer can.

You really need to check with HMRC if they have told the pension company about your previous earnings. If not you might be in a much worse position than you expected.

I'm a bit confused by that because my understanding was that the pension provider is obliged to use the tax code provided by HMRC for payroll, regardless of anything they know about past employments?  Wouldn't that only be relevant if HMRC had not yet given a tax code?

When the system works correctly and you leave one taxable income and still have another taxable income, HMRC will advise the payroll dept. for that second income what tax code to use and also your previous taxable pay and tax paid (ie the figures that show on your P45).  In that way the two are merged and as far as tax deductions are concerned they are now the same as if you had been on that payroll from the start of the tax year.  
Most payslips will have a section for this to show, either headed something like "pay in previous employment/tax in previous employment, Total taxable pay to date/tax paid to date or sometimes both.  If there are figures like that then these details have been given by HMRC.

Hmmm.... so does this mean I should also provide the parts 2 and 3 of my P45 "Copy for new employer" and "For Completion by new employer" to the pension provider (even though the pension was already in payment for 10 months prior to me leaving the employer)?

No the P45 is for transferring details of a job you are leaving ie.  code, taxable pay and tax paid to a new job,  In a case like this it should be done by HMRC.

molerat

Pat38493 said:

molerat said:

Back of a fag packet calculation

Tax due on £46630 = £6810 + £1134 owed from last year = £7944 due

Tax paid on job to date £6630

Tax paid on pension to date £3110

Total tax paid to date £9740

Total tax paid on pension of £13320 by end of year £1080 = £2030 refund

£9740 - £2030 = £7710  paid

OK so you are saying that the current tax code they have allocated will actually give the correct results (or pretty close)?

Pretty much.  At M8, November, on a code of 791 you are due £720 tax on the pension YTD and have paid £3110 so should see a payment of the full monthly pension + £2390.  Then each month going forward you should pay around £90 tax so £360 for the rest of the year with total tax paid over the year of -£2030

Pat38493

molerat said:

Pat38493 said:

molerat said:

Back of a fag packet calculation

Tax due on £46630 = £6810 + £1134 owed from last year = £7944 due

Tax paid on job to date £6630

Tax paid on pension to date £3110

Total tax paid to date £9740

Total tax paid on pension of £13320 by end of year £1080 = £2030 refund

£9740 - £2030 = £7710  paid

OK so you are saying that the current tax code they have allocated will actually give the correct results (or pretty close)?

Pretty much.  At M8, November, on a code of 791 you are due £720 tax on the pension YTD and have paid £3110 so should see a payment of the full monthly pension + £2390.  Then each month going forward you should pay around £90 tax so £360 for the rest of the year with total tax paid over the year of -£2030

OK well I got new information directly from my pension provider - they are saying that the tax code they received was 791L/0 - the /0 is not showing up on the gov.uk portal for me, but I think this makes a difference right?  This means I won't get a refund on past overpaid.

Dazed_and_C0nfused

Pat38493 said:

molerat said:

Pat38493 said:

molerat said:

Back of a fag packet calculation

Tax due on £46630 = £6810 + £1134 owed from last year = £7944 due

Tax paid on job to date £6630

Tax paid on pension to date £3110

Total tax paid to date £9740

Total tax paid on pension of £13320 by end of year £1080 = £2030 refund

£9740 - £2030 = £7710  paid

OK so you are saying that the current tax code they have allocated will actually give the correct results (or pretty close)?

Pretty much.  At M8, November, on a code of 791 you are due £720 tax on the pension YTD and have paid £3110 so should see a payment of the full monthly pension + £2390.  Then each month going forward you should pay around £90 tax so £360 for the rest of the year with total tax paid over the year of -£2030

OK well I got new information directly from my pension provider - they are saying that the tax code they received was 791L/0 - the /0 is not showing up on the gov.uk portal for me, but I think this makes a difference right?  This means I won't get a refund on past overpaid.

The 0 isn't part of your tax code.

It means the code is to be used on a cumulative basis. 

So one of two things will happen now, they have got your previous earnings info and all should be reasonably accurate.  Or they don't and you will get a massive refund when they next pay your pension, which won't factor in the previous earnings.

How long before your (pension) payslip is available?

Pat38493

Dazed_and_C0nfused said:

Pat38493 said:

molerat said:

Pat38493 said:

molerat said:

Back of a fag packet calculation

Tax due on £46630 = £6810 + £1134 owed from last year = £7944 due

Tax paid on job to date £6630

Tax paid on pension to date £3110

Total tax paid to date £9740

Total tax paid on pension of £13320 by end of year £1080 = £2030 refund

£9740 - £2030 = £7710  paid

OK so you are saying that the current tax code they have allocated will actually give the correct results (or pretty close)?

Pretty much.  At M8, November, on a code of 791 you are due £720 tax on the pension YTD and have paid £3110 so should see a payment of the full monthly pension + £2390.  Then each month going forward you should pay around £90 tax so £360 for the rest of the year with total tax paid over the year of -£2030

OK well I got new information directly from my pension provider - they are saying that the tax code they received was 791L/0 - the /0 is not showing up on the gov.uk portal for me, but I think this makes a difference right?  This means I won't get a refund on past overpaid.

The 0 isn't part of your tax code.

It means the code is to be used on a cumulative basis. 

So one of two things will happen now, they have got your previous earnings info and all should be reasonably accurate.  Or they don't and you will get a massive refund when they next pay your pension, which won't factor in the previous earnings.

How long before your (pension) payslip is available?

They said it will be used from 1st January (I guess it's too late for them to use it from 1st December).

So Google AI is wrong when it says about /0 "This element (sometimes shown as W1, M1, or X) indicates that your tax is being calculated on a non-cumulative or "week 1/month 1 basis!""?   You are saying it means that it is on a cumulative basis.

Also - they (pension provider) are saying that any information about previous earnings is irrelevant - once they receive a tax code from HMRC they are legally obliged to use that tax code.  Maybe their system does not allow them to enter previous earnings from a previous employer (they send me printed payslips in the post so it's not exactly a rocket science operation).

I know that HMRC has my previous earnings information because it's visible on their portal after "employment ended" and they also confirmed that on the phone.