Incorrectly taxed, likely to happen again, no pay, what should I do?

[Madratlady]

I recently left a full time job to work through an agency, this means that I am a casual worker and choose my own shifts, although I am currently picking up more than full time hours.

I get paid weekly by them. My last pay was my first one since going over to working for the agency as my main job. I was incorrectly taxed my entire weeks wages. I spoke to the tax office who said that my previous employer hadn't sent my P45 (a month after I'd left) so I had the wrong tax code. They sent the new tax code over to the company but when I spoke to payroll they told me that as they received it after processing this week's pay so I would still be taxed according to the incorrect tax code this week. The person I spoke to at HMRC said that there was nothing they could do except refund me after they receive my P60 in April. They said that this week I should only be taxed 20% but I have a feeling that due to the tax code they had me on I'll end up losing all my pay this week as well.

I now have no way of paying my rent and bills at the end of the month. I should just about be able to get my rent together but not bills. What should I do?

I would talk to you manager and payroll team, explain the problem, and get them to adjust your wages manually. The tax-code is really just a guide. I've had times when it has been out of synch and the accountant responsible for my payroll is quite happy to make a different deduction.

The end of the tax year is only a couple of weeks away. Keep all your payslips and make a claim for overpaid tax anyway. But get your employer to make the short-term change in the meantime. Good luck

Payroll at the company (big national company so I have to deal with them by phone) claim that there's now nothing they can do about it in time for me being paid on friday.

I really don't think that there would be many payroll operators who would be happy to use a tax code other than that advised by HMRC because the employee says it is incorrect.
The employer has to operate PAYE correctly, and that means using the advised codes.
A tax code isn't a "guide" it is a code issued by HMRC which the employer has to apply to the employees earnings.

However, I really can't see how you are losing all your pay on any code?

If you are paid weekly, and the agency payroll has now received the coding (which your post implies) then they should apply your code to next weeks pay (which is still in the 12/13 tax year) and as long as it isn't a M1/W1 (month 1 or week 1) code then your cumulative position should be refunded.

What it might be worth doing is asking the employer/agency for an advance to be deducted from future pay?

Alternatively you are going to have to find the money elsewhere on a short term basis - credit card, approved overdraft, loan from family etc.

it is probable that they are correct, payroll for payments on Friday would have more than likely already have been processed and sent to the bank.

I was told by HMRC that the reason I was taxed all my pay was because my previous employer hadn't sent my P45 this job was a 'second job'. Hopefully they'll only take 20% this week which will at least give me some money.

I don't understand what you mean about asking for an advance to be deducted from future pay. Could you explain as I'm probably just being thick.

As far as I know I can't extend my overdraft any further, I suppose I could apply for a credit card but I don't know if they'd give me one. Family wouldn't be able to afford to help.

Our financial situation involves a lot of debt as it is (DH's from before I met him, now in a payment plan, and a loan from unexpectedly being asked to move out of our rented house when we had no money for anywhere new). The debts are nearly paid off and I have a budget which, as long as I am paid correctly, keeps us out of the red. I'm just so upset because I thought I finally had our finances in control and then this happens.

by an advance I basically mean a loan from the employer that they then deduct from a future pay packet - but given what you have then said about the size of the agency I suspect that is unlikely to happen.

Presumably they are paying you something though, your aren't losing all of you pay in tax?

Your problem if they don't get it sorted asap is that once we pass 5 April then we are in a different tax year, and you are going to have to get any overpaid tax back from HMRC rather than through your payroll - and with the best will in the world that is going to take some time as the employer has to do the end of year returns, send them to HMRC, and HMRC then have to process it (or you reclaim it).

Hope you get it sorted on next weeks pay - it does seem like you should if they now have your correct coding?

An advance sadly isn't possible.

My last wage was entirely taxed so I got nothing, apparently because it was down as my 2nd job. This week I think they will just tax me 20%.

Payroll have said they can't do refunds and I have to go to HMRC who say they can't do anything until the new tax year when they receive my P60.

Thanks for your advice though ChasingSquirrels

payroll are half correct - they probably can't do refunds, but if they have your correct coding (and it isn't a month 1 / week 1 coding) and it gives you your allowance for the year then if they put another pay through for your next week it should calculate the cumulative (year to date) position, calculate the cumulative tax and then correct this through that pay,

i.e. if you have paid say £100 but the correctly calculated cumulative amount is then £80 then that £20 comes through on your payslip.

I still don't see how you could have lost ALL your wages to tax. You may have had it all taxed at your marginal rate of tax (ie excluding your personal allowance) but I can't see how that would possibly lead to a tax rate of 100%.

"I would talk to you manager and payroll team, explain the problem, and get them to adjust your wages manually. The tax-code is really just a guide."

I am afraid that's rubbish.

This doesn't sound right to me - there is no way an emergency tax code can leave you with no pay. I have come across payroll departments who will cut corners to make life easy and leave the employees overpaying tax. Can you get to a Citizens Advice Bureau, or try the charity TaxAid if your annual earnings are below £15k or so?

"I am afraid that's rubbish"

There's no need to be insulting. When my new PAYE code was clearly wrong, my payroll team simply carried on applying the old one until it was corrected. It isn't 'rubbish' therefore if it has actually happened to me.

I don't understand how I was taxed a full week's pay either, but I was as stated on my payslip. The person I spoke to at HMRC couldn't tell me why it happened either.

TaxAid probably won't be any use as my pay is hourly but would work out over £15k. Might try CAB but I think all I can really do is try and get by somehow this month and ask for a refund as soon as I get my P60.

I would try and sit down with your payroll people and get them to explain the calculation to you as I suspect someone has made an admin error here.

I can't sit down with them, it's a central office for the whole country, nowhere near here. All I get is someone pleasant but not particularly helpful whenever I phone them.

I've still been taxed more than I should've been this week but at least I actually got some pay.

I'll be applying to HMRC to get back the overpaid tax ASAP though. Apparently the company I work for can't do refunds, according to payroll.

There is no tax code that takes 100% of your pay. There never has been.
In the absence of the P45 an employer uses tax code BR, which stands for Basic Rate (20%).

Look at the payslip that you say you got no pay at all on. What is the figure of Gross Pay, Tax, and the tax code?

Check your tax code if HMRC think it is your second job then you will be taxed at BR or BR wk1. Make sure you have told HMRC that it is your only job. If you have received your p45 from your previous employer give the copy to the new employer. Employers have to notify HMRC about leavers and starters, if not there are now heavy fines for them. An option would be to ask your employer to ring HMRC to check tax code. They can do this. Make sure you have given permission to hmrc to speak to the employer on your behalf. No matter what your tax code an employer can not take more than a certain percentage from you pay, sorry I cant remember what the percentage is, BR or BR wk1 means they take 20 % of every £ earned, with new tax year about to start so long a HMRC know you only have one job your new code should be roughly 810l? Hope this helps.

What amicissimma said. I think you could be taxed at 100% if you'd been undertaxed all year (I was once taxed at about 70% when I moved jobs so that my year to date tax was correct as previous employer had got it wrong) but for that to happen they would have had to have your previous tax information. Otherwise they should just be applying an emergency tax code, which is definitely not 100%!

If you do have to get it back from HMRC then I'd definitely advise chasing them once you've got your P60 rather than waiting for them to come to you. It doesn't actually take them that long once they've picked up your case - the challenge is getting someone to pick it up.