Tax Code K2259

[KX36]

I work in the NHS with a salary of around £24k and pay tax through PAYE. Last month I did 2x one-off shifts for a locum agency and the total pay was about £500. I've got 1 more shift for them coming up and then I'll probably stop as I have a baby on the way.

I got a scary letter today from HMRC saying my tax code for the locum agency is BR, which I'd expect, and the code for my full time job was changing from 1150L to K2259 because my personal allowance for 2017-18 of £11500 "less adjustment to rate bands" of £34100, leaving my total tax-free amount for the year as (NEGATIVE) £ -22600!

How does that work? Where did they get these numbers from? Are they estimating my second income as £34100 for the year, because it won't be. At the rate these locum shifts come up, I'd expect my income from it for the year to be £3600 if I planned to continue taking every shift going, so £11500 - £3600 = £7900 I think should put me on tax code 790L. If I phone up HMRC tomorrow and explain that, is that likely to get things back on track?

What are the implications of this, assuming they're right and I'm wrong and I don't get it corrected when I phone HMRC? Am I going to have to pay £22600 extra to HMRC this year?! Am I going to be charged the higher rate of tax if they're estimating my total income to be £24k from one job and £34k from the other? If they overestimate what my income from the agency is going to be so wildly and then it isn't so much, would they refund that amount at the end of the year automatically or would I have to try to claim it back?

I've always been able to just trust PAYE to be right, so I don't know much about it.

Many Thanks

[AmanSood]

The K code definitely does not sound right and you should call HMRC to get this corrected. If it's not corrected, it basically means that they will assume you have additional taxable income in the year of £22.6k and you would pay an additional amount of tax on it at 20%/40%. Your tax bill for the month would therefore increase by approx. £377/£754 per month. Ideally try and get this sorted before April 2017.

[KX36]

Thanks for the reply. I logged into the "government gateway" thing and found the problem because I was too impatient for the HMRC phone line to open this morning. Despite having had only 1 payment of £500 this month from the locum agency, my estimated income for the remaining 6 weeks of the current financial year from that agency was £9,900 and for next year was £68,200. (I bloody wish!) Fortunately, that's something you can just type into the government website without having to get them to do it for you or provide documentation to back up what you say the estimate should be. I set it to a more realistic number and saw the tax code for next year instantly change to 1150L, also my estimated tax bill for the next 6 weeks came down by £2000. Now I just need to make sure the tax code is right on my next couple of payslips.