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Where Taxpayers and Advisers Meet

Underpaid tax?

hatonon
Posts:2
Joined:Thu Aug 27, 2020 2:17 pm
Underpaid tax?

Postby hatonon » Thu Aug 27, 2020 2:35 pm

Hi there

I changed jobs in May, finishing one job on 1st May and starting new job on 5th May. At the end of May I received the 1 day's pay plus holiday pay from my previous employer, and my first (nearly) month's pay from my new employer. Both employers paid me using tax code 1250L.

From June, HMRC put me on code 1119L for the rest of the tax year, to adjust for what HMRC estimates will be a £206 underpayment.

My new employer had not received my P45 and says it is now too late to process - but notwithstanding, HMRCs issue seems to be that you cannot have two employers paying you against the same tax code. I am not clear why 2 months into the tax year HMRC have adjusted when on a salary of c. £25k I am nowhere near reaching my tax-free limit.

I would be grateful if someone could explain. Have HMRC simply taken the May total earnings and assumed that to be my new monthly income for the rest of the year? (I wish, ha!) Why would they adjust so early in the tax year instead of waiting until the end and then making any adjustments?

Do I actually owe additional tax in the first place?

Yours, confused.

bd6759
Posts:3449
Joined:Sat Feb 01, 2014 3:26 pm

Re: Underpaid tax?

Postby bd6759 » Thu Aug 27, 2020 9:09 pm

2 employers cannot use the same code in the same month otherwise you get your allowance twice.

Each month you get 1/12th of your allowance. That’s about £1041. If you got it twice, you will have underpaid by that amount at 20%: roughly £208.

hatonon
Posts:2
Joined:Thu Aug 27, 2020 2:17 pm

Re: Underpaid tax?

Postby hatonon » Fri Aug 28, 2020 4:22 pm

Noone had explained the monthly allowance principle, so thanks for that. If my new employer had processed my p45 would it have had any effect on the outcome? Presumably they would have used a different tax code.

bd6759
Posts:3449
Joined:Sat Feb 01, 2014 3:26 pm

Re: Underpaid tax?

Postby bd6759 » Fri Aug 28, 2020 6:22 pm

Difficult to prevent this because the P45 is not normally issued until after the last payday. In this case the last pay day was also the first payday of your new employment.


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