How does HMRC continue operating like this?

EvilRob

EvilRob

EvilRob

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Joined
15 Jan 2011
Posts
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Answer: "because they can", I suppose

I received my payslip today and it is missing a significant portion of my take home pay.
HMRC has changed my tax code from 1128L (£11,280 per year tax free) to K498X (-£4980 tax free) without bothering to notify me.
I got a bonus and it seems like they assumed I'd be earning that amount every month going forward??

I updated my tax account online with my actual expected earnings and now my code is 803T (£8030 tax free).

Where has the (£11,280-£8030)=£3250 gone? I have no clue.

I feel like I need to hire an accountant just to explain my PAYE tax, as there is no explanation from HMRC to go along with it. Just me or ridiculous?
 
You should get a breakdown from HMRC as to why though but they are slow. At work last week we got an email saying my tax code had changed. I didnt get the letter myself explaining why until this morning.
 
Yep it will be to do with your bonus.

In terms of the new, lower tax code, it may be that even after paying tax on the bonus with the K code, you'll still have underpaid tax for the year if it reverted back to 1128L so they have revised it down.

It could also be an error on HMRCs part. Probably a 50/50 chance either way :D.
 
DanTheMan said:
Yep it will be to do with your bonus.

In terms of the new, lower tax code, it may be that even after paying tax on the bonus with the K code, you'll still have underpaid tax for the year if it reverted back to 1128L so they have revised it down.

It could also be an error on HMRCs part. Probably a 50/50 chance either way :D.
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Indeed. My tax code was right unfortunately (I have gone onto a K1438 code - ouch!) but they quite often get it wrong, either way.

We had 28 employees change from fortnightly paid to weekly paid last year. HMRC insists they are entitled to a £1600 tax refund as they wont register on their systems the earnings they got from us as fortnightly. We were instructed by HMRC to issue them P45s and put them back on the system as weekly which is what we did. There system wont process this correctly as it is the same employer both times. We have spoken to them about this but they dont know the answer and are at a loss and are still sticking with our 28 employees sjhould all get £1600 tax back so I have given up now.
 
Surveyor said:
Jim Harra would like a word...
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;)

I'd be genuinely curious to know what % of calls to HMRC in regards to tax codes end up with the customer coming away with a different tax code.

Obviously systems can only calculate a code based off the information given but I know the way earnings are extrapolated can often lead to incorrect tax codes.
 
Company car changeovers seemed to always create problems which is one reason (apart from cost) that I went lease for my last six years prior to retirement.
 
What really annoys me is that when you change jobs, HMRC insists they keep charging you for your old car by default until they are instructed otherwise.
 
Count yourself lucky, Ive had the emergency tax code of no allowance. Not for any good reason just the wages dept didnt want any liability. Same dept used the wrong NI tax code for months, that one really doesnt reverse afaik. Sounds like they believe you owe them money from the previous year but as said its often unexplained.
 
vanandjuanunited said:
Is that not normal?
You've received a company benefit hence the K code so the next month it should adjust itself again
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I don't think it's normal. I didn't receive a benefit, I got a bonus that I paid tax on. The bonus doesn't take me into a new tax band for the year so my tax code shouldn't have changed.
 
Bonuses wouldn't affect the tax code anyway. Bonuses are just earnings: that's the stuff the tax code is there for.

Tax code change could be lots of things. Underpaid tax last year, or simply that you are paying last year's tax liability through your tax code (if you complete a tax return) are common reasons for a k code.
 
silversurfer said:
Count yourself lucky, Ive had the emergency tax code of no allowance. Not for any good reason just the wages dept didnt want any liability. Same dept used the wrong NI tax code for months, that one really doesnt reverse afaik. Sounds like they believe you owe them money from the previous year but as said its often unexplained.
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No allowance is better than the code they assigned me :)
 
They once changed my tax code and annual take home prediction from £45,000 to £189,000.

No explanation, just a month of hardly any money. Computers.
 
I've had the same problem when after receiving a bonus payment, HMRC then think I am earning that amount every month. In fact I expect an email from them any day now for this very reason.
I have found HMRC staff to be very helpful in sorting these kind of problems out. It's not like this is an especially rare thing, it's just that PAYE can't really cope with ad-hoc payments.
I'd rather have a bonus and have to sort out the tax with HMRC than not have a bonus...
 
You need to contact them, same thing happen to a few friends they thought it would auto corrct but it didnt, so they phoned up the tax people.
 
This happens to me often as a result of our annual bonus. Queue an expected earnings jump to £192k!!

Last time they took £3k extra off me the month following my bonus. I called them and they agreed they'd got it wrong. They said 'the computer had made a mistake', thinking my salary had increased by several thousand pounds. They then said the system would correct itself the following month :eek: Who is going to wait that long to get £3k back??

How can they get away with operating like this? Any private company would find itself in serious water. It doesn't fill you with confidence when you repeatedly have to phone HMRC to tell them how tax works and what you should be paying. A total shambles :(
 
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