Anyone any good with deciphering HMRC stuff?

[RenegadeKeeblerElf]

I got an email today saying my tax code has changed. I've logged into my government gateway account and can see that they have updated my tax code for next year to basically mean I will be paying about £4600 more in tax. If that's right I am screwed. What I can't understand is why. I could understand it if I had earned over the 20% threshold between my different 'jobs' (I have two 'employments' for the same employer - one for my contracted role and one for my overtime/bank shifts) but only been paying BR tax, but that isn't the case - my total for both employments this year will be around or very slightly over the cutoff for the 50% rate.

To be clear - tax code this year is 989L (I have a lease car through work which reduces it). Total from all employments is currently about £42k for this tax year so will probably be close to £50k in total but not enough over it to have underpaid that much tax. Tax code for next year will apparently be 547L but no explanation about why. Any ideas what might be going on?

You will have another tax code for your other employment, totalling the normal allowance. As an employer of someone with two sources of income, I have had many a random tax code for them.

Do you do self assessment for any reason?

You should also get a letter which breaks down what the change is for - does your email say anything???

You should get an explanation when you get your letter.

If you login you can see what they estimate you’ll earn next year and adjust it. I’ve just had to because they awarded me a £25k pay rise that wiped out my personal allowance for no reason known to man…although, maybe it’s the universe trying to tell me what I’m actually worth 🤣

I don't think I'll get a letter as the email said it was being sent as I had opted to get email only communication, no letters, and the email says it doesn't give details for security reasons, and I need to log into my online account for details (which aren't there!). The tax code for the other 'job' is BR so my personal allowance is only used on my main employment. That's why I could understand it if the two combined had taken me way over the threshold - I would owe the extra 30% tax on everything I had earned over £50k. But that's only going to be a few quid, not £4500.

It looks like HMRC have allocated some tax free allowances to your second job. You can ask to get all of your allowances on to your main job & then pay the full 20% tax rate from your bank shifts.

Yes, I did see that, and that estimate is too high, but only by about £5k, which again doesn't account for losing so much extra tax, or for adjusting my personal allowance which would indicate they are clawing back a previous underpayment.

That's how it is currently set up, but the change for next year clearly states there is an 'adjustment to rate band' applied to next year's personal allowance.

Crosspost - disregard my previous post. It’s difficult to tell without seeing how your tax code is made up. Normally it would be due to incorrect income, benefits in kind (car in this case), or other employment.

Ooh, I’m wondering if it’s possible you have underpaid tax this year that is now being included in your code? Did you get your car added to your code as soon as you got it? Not adding in a benefit in kind on time could cause an underpayment?

It starts with the usual personal allowance of £12570 then there are additions totalling £263 for professional fees etc, a deduction of £2940 for the car (these are all identical for the two tax years) then at the end it says 'adjustment for rate band' which is n/a for this tax year and £5476 for next year.

I've had the car benefit for about 4 years so it shouldn't be that

Although I do think I might be panicking too much as I've realised that although it says at the top of the page that they estimate I will pay £4600 more in tax next year, that is because they estimate my pay will go up. An adjustment of £5476 won't actually result in extra tax of that amount, it will 'only' be the 20% tax on that figure that I'll actually lose, which is much more manageable. I do need to ask them why though

HMRC could have estimated that the pay from one of your jobs exceeds the personal allowance and told the employer of your second job not to include any personal allowance in the calculation for your second job.

@RenegadeKeeblerElf Where are you getting that you will have to pay £4500 more tax from? And you're referencing the "cut off for the 50% rate"?

A deduction in a tax code for "adjustment to tax rate band" usually means that they think your second employment will take you over the basic rate threshold but not enough to change that tax code from BR to D0 (ie higher rate tax on all of it). They think some of those earnings will be higher rate tax (40%) and are probably estimating. You can ask them to change it by telephone them.

I don't know how you're calculating £4500/£4600 "extra tax" though?

I got the same today but on the hmrc app I can see they've adjusted my tax free amount to £1,504 less.

To me it looks like they've assumed I'll underpay tax by that much this year but I don't see how I have but will see how it looks in few weeks I'm not sure if they expect me to earn more this month than usual

@RenegadeKeeblerElf cross post - I see now the reference to £4600 and that you've realised yourself your mistake in the impact of a reduced personal allowance.

Sorry I said 50% tax but I meant 40%. And I think we cross-posted about the extra - there are two figures on the page that I realise now mean different things - my personal allowance has been reduced by £5.5k ish which will equate to approx £1.1k extra tax, but also my estimated income has increased due to pay rises and so HMRC have calculated that those two things combined mean I will pay £4600 more in tax than I have this year.

@RenegadeKeeblerElf Yes - just phone them up (if you don't mind being in a queue for an hour at least - call at 8 am - it's quieter then) and tell them what you expect your pay to be and they will adjust it so it's more accurate. They will do it straightaway if they have ratings too high

Out of curiosity, if I do go over £50k and therefore lose some entitlement to child benefit, does that get clawed back through the tax code or would I have to pay it directly? And when would that get calculated given that I don't do self assessment?

Sounds like the estimation of your incomes plus benefits like the car is pushing your total income over the 50k mark so hmrc are planning to tax some of your income at your primary job where you have all your personal allowances at 40%.

They will usually leave a secondary source on the BR code so the adjustment to rate band is a complicated calculation in order to collect some of your income at 20% and some at 40%.

Just call up and ask them to adjust your estimated income for 23/24 make sure both sources are correct and they'll update it and re-issue an updated code to you and your employers.

It usually takes a few days after they email you for your new tax code notice to appear in your online account (really annoying).
If you look in a few days you should be able to see the full notice and how it is made up.

I got the same message today; I'm going to be paying £3500 in tax, but my tax code hasn't changed? Also I'm on maternity leave so no clue how they have calculated it

You need to do a self assessment to pay back the child benefit. It's really easy though and still worth claiming CB as you would only lose a small amount.

When you have 2 PAYE jobs, even though they are supposed to be experts, HMRC don't actually seem to be able to cope with it. I had a PAYE role that I'd been in about 6 years, I did a small amount of additional work elsewhere (about £1500 a year) and they put all my tax free allowance to that role but allocated loads more than £1500. I had to call them to sort it but they did sort it quite quickly, I just called them to give them the correct salary amounts for each job.

Ah, I think that makes sense! In that case I think I'll do some maths and work out how much bank I think I'll do on average and see whether their estimates are too high - at the moment it's about £5-6k more than I've done this year so it probably could be adjusted down but I'd rather err on the side of caution and not end up owing them money at the end of the year!