Tax muddle help, please?

[Mation]

Sorry if this is unclear. I find it boring, confusing, difficult and worrying, so it's hard to write about.

E2A: spoilered solely because it's long and dull and, my question has now been answered!

Spoiler

Started a new job late in 2019 and ended the previous one. Forgot to ask for a P45. Old employer didn't generate one. New employer didn't ask me for one.

Got a letter from HMRC several months ago, saying I'd paid too little tax for the year 2019-20, which I'll have to pay from April 2021. I contacted HMRC and told them when I'd stopped working at old job. They wrote back and said they'd temporarily closed it (whatever that means), but that they'd need official notification directly from old employer.

Old employer had generated a P60, suggesting I'd worked with them until March 2020. When I discovered this, I asked for a P45 instead. They generated one, saying my employment ended in December 2020.

Looking at my record on the HMRC site, it shows that I have received £0 from old employer since November 2019, but also estimates that my income for the year 2020-21 will include income from the old job. They have the end date for old job that's on the P45.

Is that the official confirmation they were looking for? Does it matter that the dates are wrong? Do I need to do anything? Can I stop thinking about this?

Tl; dr: P45 cockup. Will this sort itself out automatically, as HMRC have my correct actual earnings on their system, even though the estimate is wrong?

 

[A380]

Sorry if this is unclear. I find it boring, confusing, difficult and worrying, so it's hard to write about.

Started a new job late in 2019 and ended the previous one. Forgot to ask for a P45. Old employer didn't generate one. New employer didn't ask me for one.

Got a letter from HMRC several months ago, saying I'd paid too little tax for the year 2019-20, which I'll have to pay from April 2021. I contacted HMRC and told them when I'd stopped working at old job. They wrote back and said they'd temporarily closed it (whatever that means), but that they'd need official notification directly from old employer.

Old employer had generated a P60, suggesting I'd worked with them until March 2020. When I discovered this, I asked for a P45 instead. They generated one, saying my employment ended in December 2020.

Looking at my record on the HMRC site, it shows that I have received £0 from old employer since November 2019, but also estimates that my income for the year 2020-21 will include income from the old job. They have the end date for old job that's on the P45.

Is that the official confirmation they were looking for? Does it matter that the dates are wrong? Do I need to do anything? Can I stop thinking about this?


Tl; dr: P45 cockup. Will this sort itself out automatically, as HMRC have my correct actual earnings on their system, even though the estimate is wrong?

You can go in the HMRC site and change your estimated future earnings. It’s a pretty good site on gov.uk but you need a government gateway account. That’s a bit of a pain to set up but definitely worth it.

 

[Mation]

You can go in the HMRC site and change your estimated future earnings. It’s a pretty good site on gov.uk but you need a government gateway account. That’s a bit of a pain to set up but definitely worth it.

I've got a Government Gateway account. That's how I can see they've got the right amount for actual earnings.

Can't see anywhere to change the estimate. The page for this year looks something like this:

Your PAYE Income Tax summary for 6 April 2020 to 5 April 2021

This section is the income tax summary for Mation
Your current employments
LOAD OF CLOWNS
Your estimated taxable income is
£paltry.sum
Tax code: blahblah
Payroll number: 12345etc
link: View or update employment details (Update or remove LOAD OF CLOWNS)

Employments that have ended since 5 April 2020
OLD EMPLOYER
Your taxable income to date is
£the full amount I earned in the previous year*
Payroll number: 678910etc
End date: December 2020**
Link: View employment details***

*Actually £0
**This is from the P45, and is incorrect. Actual end date was a year earlier.
***No 'or update' option in the link.

 

[Mation]

Reading that back, it sounds really abrupt. Sorry, A380. Not directed at you, at all.

I'm recoiling in horror from all of this and my social skills are at capability level 0.

 

[A380]

No worries know the feeling.

I did the same thing a couple of weeks ago, they sent me a paper tax forecast by I’m moving on so the projected salary was much higher than I will be getting. There was an option to change it on the site, it was just a click box from memory- then about three days later I got an amended paper rac forecast. Do you have a tab, drop down or similar for future tax years? I think, again from memory it might have actually said the year, I.e 2021 to 2022?

 

[Mation]

No worries know the feeling.

I did the same thing a couple of weeks ago, they sent me a paper tax forecast by I’m moving on so the projected salary was much higher than I will be getting. There was an option to change it on the site, it was just a click box from memory- then about three days later I got an amended paper rac forecast. Do you have a tab, drop down or similar for future tax years? I think, again from memory it might have actually said the year, I.e 2021 to 2022?

Yep, got a page for the next tax year, but it only has an update link for my current employer. Says n/a for the previous one.

 

[Sasaferrato]

The P60 should show total pay in employment, and will show for the whole year, as that was your income from that employment for that tax year.

I have three P60s each year, State Pension (which is taxable ) and two other pensions.

 

[Mation]

The P60 should show total pay in employment, and will show for the whole year, as that was your income from that employment for that tax year.

I have three P60s each year, State Pension (which is taxable ) and two other pensions.

But should I have had a P60, given that my employment didn't last for that whole tax year?

 

[Sasaferrato]

But should I have had a P60, given that my employment didn't last for that whole tax year?

Yes, issued at the end of the tax year.

If you work for Smith, Bloggs, Jones and Dachshundficher serially within a tax year, you should have four P60s. Reason is, people can be employed and self-employed simultaneously, year end, you need the P60s as a record of earnings and tax paid.

That said, the last tax return I had to do was post the introduction of Real Time Information (RTI), all the boxes were filled, all I had to do was 'sign' it.

 

[Leafster]

Yes, issued at the end of the tax year.

If you work for Smith, Bloggs, Jones and Dachshundficher serially within a tax year, you should have four P60s. Reason is, people can be employed and self-employed simultaneously, year end, you need the P60s as a record of earnings and tax paid.

That said, the last tax return I had to do was post the introduction of Real Time Information (RTI), all the boxes were filled, all I had to do was 'sign' it.

I don't think there's an obligation on the employer to produce a P60 if someone's left during the tax year but they should produce a P45 which will have the same tax information.

Having said that, some employers will still produce a full run of P60s for all employees in the year as it can be administratively easier.

 

[Puddy_Tat]

On the basis that I'm not a tax-person or payroll specialist, just someone who's changed jobs a few times -

Started a new job late in 2019 and ended the previous one. Forgot to ask for a P45. Old employer didn't generate one. New employer didn't ask me for one.

If you start a job without having a P45, either because your previous employer hasn't given one to you, or if you've got multiple jobs, then you are supposed to fill in a P46 instead (and there's different boxes to tick to say either that this is now your only job or that you've still got another job as well. New employer should have issued you with this when you started and didn't give them a P45. (although with one past employer, I did give them a P46 and it then got eaten by trolls in their HR section and never got to the tax-person, so it also took a fair chunk of sorting out.

I don't think there's an obligation on the employer to produce a P60 if someone's left during the tax year but they should produce a P45 which will have the same tax information.

Indeed. I also thought you only get a P60 if you are still employed by that place (or on a pension from them) at the end of that tax year, and if you leave during the tax year then you get a P45. Fairly sure I've never had a P60 in april from a place i've left during that tax year.

***No 'or update' option in the link.

bugger.

Old employer had generated a P60, suggesting I'd worked with them until March 2020. When I discovered this, I asked for a P45 instead. They generated one, saying my employment ended in December 2020.

Looking at my record on the HMRC site, it shows that I have received £0 from old employer since November 2019, but also estimates that my income for the year 2020-21 will include income from the old job. They have the end date for old job that's on the P45.

hmm.

I think it's going to be simpler overall (even if a bit more drawn out, especially if they have staff on furlough / work form home) to write to the tax-person again and set the facts out (again) rather than try and do stuff online.

Having said that, it may be worth waiting a few days and looking at your online record again - sometimes when computers are involved, part of the information gets amended one day, then another bit a few days later, so you can sometimes get nonsense between the two stages.

 

[nottsgirl]

I don't think they use P46s now, HR are just supposed to get the info off you and sort it with HMRC.

 

[Leafster]

I don't think they use P46s now, HR are just supposed to get the info off you and sort it with HMRC.

P46s still exist but now they are called "new starter checklists". They don't have to be used by an employer so long as the employer has a way of collecting the same information from a new starter. It's often easier for an employer to use a "new starter checklist as provided by HMRC as it includes all the questions they need to ask a new employee (for PAYE at least). So, in effect, the P46 still exists but with a different name!

With RTI the information collected via a new starter form is relayed to HMRC via the first FPS when the new employee is paid for the first time. If HMRC's systems spot something which suggests the new starter checklist doesn't have all the correct information to tax that new employee correctly going forward they issue a revised notice of coding to the employer to operate for the payroll for the next pay period. But cock ups by the employer and HMRC still seem to happen on a fairly regular basis.

 

[RubyToogood]

I had a similar problem where a previous employment kept not being closed off and I was overpaying loads of tax. Finance bloke at work looked at it and said I was on the wrong tax code.

I used the online chat function on the HMRC website and spoke to someone who sorted it all out.

 

[Mation]

With thanks to everyone who's responded, can I go back to the question in the OP? This is all really difficult for me to follow.

Does anyone know whether the fact that HMRC has my correct actual earnings means that I will pay the correct amount of tax? Or will their wrong estimate of my earnings affect how much I need to pay? I need to understand that before I can grasp what to do about it

I've probably confused things with all of the background detail. Included as I don't know which bits might be relevant.

 

[nottsgirl]

I don't 100% understand what's gone on but I think it's important to get the right date on your p45, at least.

 

[pseudonarcissus]

Does anyone know whether the fact that HMRC has my correct actual earnings means that I will pay the correct amount of tax? Or will their wrong estimate of my earnings affect how much I need to pay? I need to understand that before I can grasp what to do about it

I think so, but they will probably want to pay you back by adjusting your tax code in the subsequent year, rather than cutting a cheque.

The important thing is that all income has been declared, and if you’re PAYE you tend to over pay due to emergency tax codes, rather than you owing anything.

As some one said, if you can contact a real person, they are usually fairly helpful...or be confident filling in a tax return and they will give it the nod.

I have complex non-resident stuff, and I pay someone to check my tax return, which is cheaper than them filing it for me.

 

[Mation]

I think so,

About which thing? That I'll pay correct tax based on the actual earnings, or that the estimate will affect what I pay?

Not trying to be difficult. Because this is difficult territory for me, I can't work out from any other cues which of the two things you meant.

Please can someone answer only the question I asked? I don't have any mental hooks to hang the rest of it on.

 

[Puddy_Tat]

With thanks to everyone who's responded, can I go back to the question in the OP? This is all really difficult for me to follow.

Does anyone know whether the fact that HMRC has my correct actual earnings means that I will pay the correct amount of tax? Or will their wrong estimate of my earnings affect how much I need to pay? I need to understand that before I can grasp what to do about it

I've probably confused things with all of the background detail. Included as I don't know which bits might be relevant.

not sure

as pseudonarcissus has said, if they have at some point got the mistaken idea you have two jobs, then you're more likely to have overpaid than underpaid tax

maybe worth comparing your most recent pay slip against something like this

and what tax code does it show?

1250L is the tax code currently used for most people who have one job or pension.

from here

ultimately, i suppose if everything is ok, writing to them again won't do any harm...

 

[pseudonarcissus]

The old job would have arranged the tax based on 12 equal pay cheques. If you were earning £10k/mo they would calculate your tax based monthly instalments of £120k/12.
If your new job pays £20k/mo, they will deduct tax for the remainder of the year assuming a £240k salary.*
If you switched after 6 months, so your total salary was actually £180k, your would be owed a refund, or a subsequent year tax code bigger than the standard 1250, or whatever.
It should all come out in the wash.
The default is always get people to pay more. If the new job is less money than the old, the refund would be from overpayment of the first half of the year.

They really should sort out your P45 with the correct dates, but it’s the P60s or the record of total income and total tax paid that’s important. I thought they were legally obliged to produce a P45 within 30(?) days of leaving employment.

*figures purely for illustrative purposes, but I really hope you are paid this

 

[Mation]

Thank you. I know that I can contact HMRC.

I just wondered if anyone on urban knows the answer to this question, as that will help me not do a massively long and overcomplicated request to them, if in fact I do need to contact them. Or, ideally, will mean I can forget about it.

You're all doing the usually helpful thing people do, which is trying to anticipate what someone ultimately wants to know, and answering that question. But for this person with ADHD it doesn't help.

Does anyone know whether HMRC's systems autocalculate, based either on the actual earnings they have or on the estimated earnings they have?

It may be that I want and need to know all of the extra stuff you're telling me, but at the moment I can't follow it because I don't know the answer to this basic bit. And with every step between where I am now and the other stuff mentioned, there are ever multiplying clouds of uncertainty that mean I eventually don't understand a word.

Aaaaarrrrggh!

 

[strung out]

If your tax code is correct, it should auto-calculate based on your actual earnings. HMRC will know how much you've been paid across all your jobs, and amend your tax code if they need to recoup/repay any under or over payments from previous years or because of other adjustments, e.g. home working tax relief.

 

[Mation]

In other words, I'm not asking how much tax will I pay, or how can I calculate how much tax I will pay. I'm asking how do HMRC's systems work, given that they have two different sets of figures?

Apologies if this sounds churlish. There's lots of kind effort here, I know x

 

[pseudonarcissus]

They should sort it out for you based on the information automatically sent by your employers. From the HMRC website:

“Who must send a tax return

You must send a tax return if, in the last tax year (6 April to 5 April), you were:

self-employed as a ‘sole trader’ and earned more than £1,000 (before taking off anything you can claim tax relief on)
a partner in a business partnership

You will not usually need to send a return if your only income is from your wages or pension. But you may need to send one if you have any other untaxed income, such as:

money from renting out a property
tips and commission
income from savings, investments and dividends
foreign income”

I can’t bold this but, for some reason:

“You will not usually need to send a return if your only income is from your wages”

It sounds like you’ve been PAYE throughout. Changes in employment may cause temporary overpayment but it should be corrected in the subsequent tax year.

 

[strung out]

Also, you can amend estimated earnings yourself in the system if they're incorrect. I've done it myself a couple of times this year already.

 

[Mation]

If your tax code is correct, it should auto-calculate based on your actual earnings. HMRC will know how much you've been paid across all your jobs, and amend your tax code if they need to recoup/repay any under or over payments from previous years or because of other adjustments, e.g. home working tax relief.

Thank you. And thank you. A multitude of times.

That's exactly what I needed to know!

 

[pseudonarcissus]

In other words, I'm not asking how much tax will I pay, or how can I calculate how much tax I will pay. I'm asking how do HMRC's systems work, given that they have two different sets of figures?

YES, they are pretty good, don’t worry.

“Trust, but verify” - Ronald Reagan

 

[strung out]

Thank you. And thank you. A multitude of times.

That's exactly what I needed to know!

Caveat is as I said, that your tax code needs to be correct. If it's changed recently or it's been applied to the wrong employer (I know you said this seems to have been fixed), then it might not get sorted immediately and roll over to the next tax year. HMRC will eventually sort it, but you can request a refund or to pay it yourself if you want it done sooner.

 

[Mation]

Thank you, everyone.

I think I need a lie down!

(But it will be a much less worried one )

 

[Shippou-Sensei]

I would think that they probably get this exact problem all the time.
Probably something that a phone call to their help service could possibly sort in minutes.



I of course would avoid calling them right to the point bailiffs were at the door as I am painfully phone shy.
I'm normally fine when actually on the phone but on a certain level I avoid phone calls like the plague.