Tuesday, January 31, 2006

Tax Codes, PAYE and the Inland Revenue

PayAsYouEarn should be so simple. Anyone who pays income tax through their payroll should have a NI number, and what you pay should be spotted by the Inland Revenue.
This appears to be OK in the majority of simple cases. But it all seems to fall apart when you complicate matters by having a second job. Logic suggests that the IR knows that my NI number in 2004/05 has paid a certain amount of tax, some through a normal tax code, and some at the basic rate, and for the following tax year they should amend my tax code for 05/06 to adjust for any under of over payment.
But no. They didn't have an inclining that I might have not been paying the right amount until I went in to see them. My one bit of praise for the IR is that they manage walk-in enquiries quite well.
Having done a bit of research, it turns out that I may not be the only person to have under or over-paid my tax for 2004/05, and that the PAYE system isn't reliable enough to talk to itself, yet alone other systems (the IR doesn't deal with NICs, and you have to submit claims to a completely different office in Newcastle).
So when you look at your pay slip at the end of the month, just double check your tax code...


At 1:30 pm, Blogger Mark Valladares said...


HM Revenue & Customs would say, if it responded to such things, that we do deal with NICs (we absorbed the Contributions Agency in 1999) and would question whether or not form P46 had been completed by you at your second job. If it had, and been submitted by your second employer, a link should have been made to your primary tax office (the one that deals with your main employment) and guidance given to your secondary tax office to issue an appropriate tax code, taking into acconut your expected earnings at your first job. We're surprisingly efficient, often despite the best efforts of employers and employees to screw things up!

At 3:19 pm, Blogger Niles said...

Hmmm. I see my second job as a form of compulsory savings. They tax all of it, I get a wee cheque back at the end of every year after I complete my tax return.

I have to do a tax return anyway, and since I've been doing one, there hasn't been a year when I didn't get a refund of some sort.

At 5:15 pm, Anonymous Anonymous said...

I have actually found HMRC staff on the phone very polite and helpful but over the course of a month either incapable of properly actioning an address change or stuck with a computer system that ignores them.

As a result someone somewhere in south London now has all sorts of information about me!

At 4:09 pm, Blogger Radders said...

A P46? Filled one of them in, but surely not relevant for a 2nd job. I then was never sent a coding notice, and the standard code continued to be used on my 1st job. As they are one and the same tax office I was expecting at least the system to talk to itself. Thats what a unique identifier like a NI number should be doing...
I've got no complaints about the way they've dealt with it now, infact I was very impressed with how friendly it all was.
My 2nd job is essentially all savings, although a chunk goes to the party (and all reported through PPERA). But then the cllr expenses for Birmingham are one of the largest in the country, with wards about 1/4 of a constituency and just short of 20k constituents.


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