The tax department has explained when it will issue refunds
Paying too much tax is never something anyone wants to do. But if you have the incorrect tax code you could be hit in the pocket.
HMRC has spelled out exactly when it will issue new tax codes. The group explained its rules after a frustrated taxpayer raised concerns about being stuck on an emergency tax code. The person contacted the tax authority over social media as they had been put on an emergency tax code for the fourth time since starting their new job.
They asked the tax body: “My new employer has sent my P45, can you please tell me when the emergency tax code will be removed and I will be issued any refund?” A person may be put on an emergency tax code when your situation changes, such as switching jobs.
This can happen if HMRC doesn’t have your latest information to hand. It’s worth checking if you are on an emergency code, as this could mean you’re paying income tax on your entire earnings, and missing out on the £12,570 personal allowance you’re rightfully owed.
A basic rate taxpayer denied their personal allowance could end up forking out an extra £2,514 annually in tax. Your P45 is a vital piece of paperwork you receive upon leaving an employer.
This document breaks down exactly how much tax you’ve paid during the current tax year, and it’s essential your new employer is given this to ensure you’re placed on the proper tax code for your new position.
How is your tax code updated when you start a new job?
In response to the taxpayer’s query, HMRC explained: “If you start a new job, you hand your P45 in from your old employer into your new employer. Your new employer reviews your previous pay, tax paid and the tax code on the P45 then they will use this for your next pay.”
The person mentioned that despite handing over their P45 to their new employer, they were still on an emergency tax code. To this, HMRC responded: “If you’ve given the P45 into your new employer, they should have used the tax code for your subsequent pay dates.”
They advised the person to get in touch with the helpline so an adviser can investigate the issue and manually issue the correct tax code. For income tax queries, HMRC can be reached at 0300 200 3300.
The lines are open Monday to Friday from 8am to 8pm and on Saturdays from 8am to 4pm. HMRC also offered further guidance to the taxpayer: “Normally, we wait until we have your new employer’s details and your old employer’s final information before issuing the correct tax code.
“Once applied, this will ensure any refund is processed on your next payment.”
