Reclaiming overpaid Tax in first year of work

[98elise]

My sons started his first job this year and has been paying income tax through PAYE. He won't have earned enough in the tax year to be liable for tax, so does he need to claim it back or will it be refunded automatically?

It's been years since I was PAYE so I have no idea!

[Eric Mc]

Why has he been paying too much tax?

What is his Tax Code?

[Countdown]

Is he on the right tax code? I would have thought the payroll system would recognise he wouldnt earn more than £12,500 and not deduct tax.

[Eric Mc]

He might be on "Emergency Tax" or his employer just hasn't bothered sorting him out properly.

[anonymous-user]

Is he in a job with performance related pay each month?

[Countdown]

Eric Mc said:

He might be on "Emergency Tax" or his employer just hasn't bothered sorting him out properly.

Yup.

OP - he should have signed one of these when he started and ticked Box A. That should have enabled his Payroll Dept to put him on the correct code.

[98elise]

Eric Mc said:

Why has he been paying too much tax?

What is his Tax Code?

No idea what his code is, I assumed it's the same as anyone else. He finished Uni and started work around October and tax is deducted each month. He's had no other employment in this financial year.

[98elise]

RonaldMcDonaldAteMyCat said:

Is he in a job with performance related pay each month?

No, it's an hourly paid job in a supermarket.

[roadsmash]

Generally it is all done automatically providing his employer put him on the correct code.

Mistakes made by HMRC are generally quite rare.

[98elise]

Countdown said:

Eric Mc said:

He might be on "Emergency Tax" or his employer just hasn't bothered sorting him out properly.

Yup.

OP - he should have signed one of these when he started and ticked Box A. That should have enabled his Payroll Dept to put him on the correct code.

Thanks, I'll check if he signed anything like that.

Edited to add.....

He says he did sign something like that so as Eric has said, it's probably his tax code.

Edited by 98elise on Wednesday 3rd March 12:11

[Eric Mc]

98elise said:

No idea what his code is, I assumed it's the same as anyone else.

I'll bet you find it isn't. The "normal" Tax Code for 2020/21 is 1250L (a tax free allowance of £12,500).
It sounds like his is BR (Basic Rate) which means he is being given no allowances at all.

[Mazinbrum]

Eric Mc said:

98elise said:

No idea what his code is, I assumed it's the same as anyone else.

I'll bet you find it isn't. The "normal" Tax Code for 2020/21 is 1250L (a tax free allowance of £12,500).
It sounds like his is BR (Basic Rate) which means he is being given no allowances at all.

You can just log onto the gov.uk site and see your tax code, you can also enter your predicted earnings though I don't know how the interaction with PAYE works. Worth registering though.

[98elise]

Mazinbrum said:

Eric Mc said:

98elise said:

No idea what his code is, I assumed it's the same as anyone else.

I'll bet you find it isn't. The "normal" Tax Code for 2020/21 is 1250L (a tax free allowance of £12,500).
It sounds like his is BR (Basic Rate) which means he is being given no allowances at all.

You can just log onto the gov.uk site and see your tax code, you can also enter your predicted earnings though I don't know how the interaction with PAYE works. Worth registering though.

He's off today so he's going to set up the Government Gateway and check.

[Countdown]

It will be quicker/easier to check his tax code by looking on his payslip.

Just FYI, he needs to get it resolved before his final pay date for 2020/21. otherwise he'll need to contact HMRC to get the refund. Once we go into the new financial year it can be a PITA to get payroll to do prior year corrections.

[98elise]

Countdown said:

It will be quicker/easier to check his tax code by looking on his payslip.

Just FYI, he needs to get it resolved before his final pay date for 2020/21. otherwise he'll need to contact HMRC to get the refund. Once we go into the new financial year it can be a PITA to get payroll to do prior year corrections.

Good call. His tax code on his payslip is 1248L which is not the normal 1250L, but near enough that it wouldn't massively affect his tax payments.

[Eric Mc]

They've taken £20 off his allowance of £12,500. Why would that be?

[98elise]

Eric Mc said:

They've taken £20 off his allowance of £12,500. Why would that be?

No idea, it's what's on his pay slip. At the moment he's concerned as to why he's paying tax at all when his total pay for the year will be less than £12500 (or £12,480 from his code).

[Countdown]

98elise said:

Eric Mc said:

They've taken £20 off his allowance of £12,500. Why would that be?

No idea, it's what's on his pay slip. At the moment he's concerned as to why he's paying tax at all when his total pay for the year will be less than £12500 (or £12,480 from his code).

That is strange.

I'd suggest he phone the Payroll Manager. they should be able to tell him

(i) Why his tax code is a bit odd
(ii) Why he's paying tax at all.

He could phone HMRC but waiting times last time I called were >45minutes. In theory HMRC will send him a letter sometime in the next Financial year to advise him of his overpayment and that should also inform him what he needs to do in order to claim a refund.

[Eric Mc]

Are the deductions actually tax?

They could be National Insurance - or something else - like payments into a work related pension.

[98elise]

Eric Mc said:

Are the deductions actually tax?

They could be National Insurance - or something else - like payments into a work related pension.

Yes. It's shown as Tax, and NI is shown as a separate deduction.