Tax Codes

A question about : Tax Codes

Hi, I`m wondering if anyone can help:

My husband worked for same company for 19 years and was made redundant on 4 September.

Upto being made redundant his tax code was 818L

At the end of September he was paid outstanding holiday pay and wages owing etc the tax code used was BR M1 (not sure what this means and why 818L wasn`t used)

He has been lucky and managed to get a job 27.5 hours with a local firm only minimum wage, but its a job they have put him on tax code 810M

Today he has received some outstanding wages from June from the firm that made him redundant (we have been chasing these for months) and they have used code 0T M1 and taken a fair bit of tax off him when he is not earning enough to pay this much.

We are just really confused because as he is now earning minimum wage the amount of tax he has been paying is quite small, surely the tax paid on the wages owing should be minimal?

I hope this makes sense, if anyone can help we would be very grateful. Many thanks.

Best answers:

• The normal tax code at the moment is 810L this suggests that there was a small added allowance for something at the old job. This should show on the tax code notice sent each year.
  I would assume that on leaving a P45 was issued; has this been handed in to the new employer or if on job seekers benefit was it handed in to job centre?
  The tax code 810M sounds like the emergency tax code which is 810L month 1. On the payslip is there a pay to date figure and if so does this equal only the pay in this employment?
  I would assume that the late payments were made after the P45 was issued and are not included in the P45 figure, is this correct?
  If that is the case then the tax office will not know about these untill after the tax year end when there would allmost certainly be a rebate due.
  If the extra tax allowance is no longer due then the tax office should be advised but it will not make a lot of differance to tax paid as only worth about Ј16 a year (on 20% tax)
• Thank you for replying.
  Yes a P45 was issued and this was given to his new employer. Yes the pay to date figure is the amount he has been paid by them.
  With regards to the payments from his previous employer I would have assumed that they would have calculated his pay before issuing the P45? but might be mistaken (as they have messed up everything they have done so far) the payslip he received this morning for payment tomorrow is in respect of money they owe him from June but was only sorted 3 weeks ago, so that is definitely after the P45.
  I think the extra tax allowance could have been for uniform washing, can`t think of anything else, he also has a uniform for this new job as well.
  Will we have to tell the tax office of is it something that will be sorted by them at the end of the tax year?
  Many thanks, am grateful for you explaining it.
• As the P45 is not being used yet I would check with employer on that, perhaps missed the payroll deadline and will be applied next month. Assuming that the P45 has a cumulative code (will have no X at section 6) then should be some tax back or at least reduction when it is applied. You have made no mention of being on job-seekers so I am assuming that he did not recieve any payment, if he did then this will affect the tax position.
  You can check if the first payment was included in the P45 by comparing the gross to date figure on the last payslip before that payment was made with the gross on the part 1A of the P45. If they have the same gross then the payment following that is not on the P45.
  Not sure if you have to claim the overpaid tax or not; but I certainly would to be on the safe side.
• He is due his second pay from new employer tomorrow so will be able to check code applied to his wages and see if its changed from 810M.
  He did not claim any job-seekers.
  I`ll get him to did out the P45 copy and we`ll check the gross pay to date figure.
  I`ll let you know about both. Many thanks.
• tax is all about detail
  without seeing the figures it's imposible to say.
  However assuming he will earn more than 8105 in the tax year it may well be that
  -the holiday pay received in september and taxed at 20% (BR) is correct
  -his back wages just received and taxed at 20% (0T M1 ) is correct
  -his current code 810M (presumably meaning M1) although technically wrong actually gives the correct tax
  if you would like to post the actual figures we maybe could check them
• Which figures do you need? is it the total earnings on each payslip?
• basically yes
  P45 figures.. gross and tax paid
  final salary slip from previous employer figures gross, tax and tax period
  how much redundancy pay
  again gross and tax for the september payment of his holiday entitle
  again gross and tax for his june back pay
  his current gross pay and tax
• Not got all that info to hand but will get it get back to you. Thank you.
• Hi Clapton
  Here is the info, hope I have everything its so confusing:
  Made redundant on 4.9.2012 (redundancy is being paid over 4 months and he has received 3 instalments so far) he has had no payslips or anything for this just the redundancy figures ages ago.
  P45 issued 25.9.2012 and its says
  total pay Ј4770.30
  total tax Ј817.40
  tax code at leaving date BR
  pay 30.9.2012
  which was outstanding holiday pay, wages etc
  Earning Ј1042.68 tax deducted Ј206.40
  NI Ј49.04
  Tax Code BR M1
  According to this payslip the Running totals are:
  Tax Year to Date
  Gross Pay Ј9743.38
  Taxable pay Ј9742.38
  Tax Ј1402.20
  This Employment
  Gross pay Ј4770.30
  Taxable pay Ј4770.30
  Tax Ј817.40
  __________________________________________________ _
  New Employer - Ј6.20 per hour 27.5 hours week
  31.10.2012
  Salary Ј261.95 Net Pay Ј261.95
  Tax code 810LM
  30.11.2012
  Salary Ј732.12 tax Ј213.60
  Overtime Ј336.35
• Sorry didn`t mean to press send
  30.11.2012 (new firm)
  Salary Ј732.12 tax Ј213.60
  Overtime Ј336.35 NI Ј52.32
  Net pay Ј802.55
  Tax code BR M1
  (they have his P45)
  ____________________________________
  Pay 30.11.2012
  Money owing from June 2012 - old company (they mislaid paperwork)
  other pay Ј431.77 tax Ј86.20
  net pay Ј345.57 NI 0.00
  Tax code OT M1
  Also on this payslip it says
  Tax year to date
  gross pay Ј5637.93
  taxable pay Ј5637.93
  tax Ј717.60
  This employment
  gross pay Ј5737.93
  taxable pay Ј5637.93
  tax Ј717.60
  NI Ј368.47
  NI Ј427.81
  We are absolutely baffled as didn`t think he would pay tax on his wages this month from the new company as nearly all his overtime has been taxed.
  Any help you can offer would be wonderful.
  Thank you it is much appreciated. (please ask if I havn`t given you all the info)
• Was wondering if anyone is able to have a look at the figures and tax codes I posted. Not really sure whether we have to get in touch with tax office wor wait for the tax code to sort it out. Many thanks
• I think you need to get in touch with the the tax office now. The currently employer is using the code BR and he should be on at least 810 as it is his only job.
  Looking at the overall position there seems to be an overpayment. There were three employers during the tax year. The gross earnings were -
  4,973 from employer 1.
  4,770 from employer 2 up to the P45, plus
  431 on the November payslip
  1,330 from the current employer (261.95 + 732.12 + 336.35)
  making a total of Ј11,504. Up to the end of November he would be entitled to eight months personal allowance. 8/12ths of Ј8,105 is 5,406 so the taxable income is Ј6,098.
  Tax on this at 20% is Ј1,219.60.
  Looking at the tax actually deducted and foolowing the same order as the earnings figures above he has paid 584.80 + 817.40 + 86.20 + 213.60, a total of Ј1,702.00.
  I think he is overpaid by Ј482.40.
• Thank you so much for looking at this for us, its really appreciated.
  Do we just give the tax office all the info I posted above or will they have all this? Also as his income is now much reduced the tax element should be really small, how would the tax office pay back the overpayment?
  Thanks again.
• I'm not really sure of the procedures in the tax offices but there are others here more knowledgeable then me.
  I would still suggest you ring them to get the code number changed. All the will need to know to do this is that the current employer is to be considered the main one. This will stop the overpayment increasing.
  If you also tell them that you are overpaid for the year to date they may suggest a way of getting the repayment before the year end.
• Thank you.
• I'm a little confused about the figures
  from the first job what do you think his total pay gross was?
  from his second job what do you think his total gross pay was?
• Hi Clapton, thank you for replying I`m so sorry for the delay in replying.
  This info is taken from the actual payslips and not P45
  Job 1 (employed there for 19 years) Apri - June Ј4972.08 gross pay
  Job 2 (this was same company but different position decided to take redundancy on 4 Sept) July - Sept Ј4882.64 gross pay
  Money owing from Job Ј553.35 gross (paid in August & Nov)
  Current job Ј2069.25 gross Oct - Dec
  He started off with tax code 818L (April to July)
  Also codes BR M1 and OT M1 have been used since by Job 2 and current employer
  He has today received Ј573.72 into the bank (gross Ј738.83) so am assuming they are still applying the wrong code but he does not have payslip yet waiting for this before doing anything.
  We are hoping to put this info into a letter to the tax office laid out in a similar way to posting above (thank you) to try see about refund of the over paid tax.
  If there is anything glaringly obvious that we are missing I would really appreciate any input that can point us in the right direction.
  Many thanks. Happy New Year.
• Hubby has just received latest payslip and he is still on tax code BR M1 his new employers said the P45 said he had to be on this code!! I`m just so confused.. looking at payslip he has paid 20% tax but got no %of his personal allowance.
• he is on the incorrect tax code
  he should be on 810L rather than BR
  he needs to contact HMRC who can instruct his employer to change the tax code.
  best to try phoning : first thing in the morning or evening is probably best
  have the figures to hand
  give them the total earned to date
  and the total tax paid to date
  and ask them to issue a new code 810L to his employer
  they may want the full details from each employment so have them to hand too.
  happy new year