Bit of a puzzler here. My previous role ended March 31 and I have my P45 from that, which I forwarded to my new employer (whom I started with on Aug 17th).
However, in the meantime I was claiming Jobseeker Allowance and when I phoned up to stop it on Monday, they said I would get a P45 early next week.
Now I’ve had an email from Payroll asking for bank details and my P45 (which they are happy to wait for, as I’ve missed this cycle anyway).
My question is, if I submit my JSA P45, will I be on a really low tax rate for a while then get slugged next year, or will the code ‘catch up’ with my current salary? I’m confused as to which one I should be submitting.
If your previous role ended 31 March then I believe as it was last tax year your new employer doesn’t need that P45. They should only be interested in this tax year to see earnings and tax you’ve paid to date since 6th April to take into account for this year’s taxation.
No expert on JSA, but I would think you should just sent the P45 from them when it arrives. As long as they have the info before they run first payroll it should be alright and they’ll tax you appropriately each month and will balance out by end of this tax year, ending next 5th April.
Edit: not a payroll or tax expert, just been in a similar situation but without the JSA part. Finished job Nov-18, started next job Aug-19, so I just told them I just told my new employer and they were happy without any P45.
Sorry to hear that. It was pretty painless for me, all online, had all my docs ready to go but they didn’t require any of them. I had claimed before, so not sure if that made a difference. I didn’t even get a phone call.
TBH, it was more hassle to cancel it. You’ll have to do it after her last day and she wont get anything for the first 7 days. IIRC, it took me 5 wks from applying to getting it approved (backdated of course)
I think you’ll probably end up on an emergency tax code and being taxed as if you’d been earning at your current level since the start of the tax year to begin with, but they should recode you with a tax code that takes account of your lower income at the start of the year fairly quickly.
Yep - comments above are accurate.
Assuming your payroll department are mildly competent - you’ll get put on a week1/month1 code - so you’ll just be taxed based on each periods earnings.
Once your JSA P45 comes in - they’ll be able to switch you to a cumulative tax code. That will then on the next pay period recalculate your tax based on the entire tax year earnings (inc JSA) and tax paid to date (in the current tax year).
So you may pay a little extra for first month or 2, then get a month where the recalc goes through - then it’ll settle down following period and through to March 2021.
This is possibly the first time on my history of TritTalk I can claim to actually know stuff - so felt compelled to reply despite you already having the answers
As above, most is largely correct (I work in corporate tax, not payroll, but have some interaction with that function).
The one thing I’d say from personal experience is the new HMRC Online app/website is pretty good. You can update your estimated full year earnings directly on the app, and it will automatically generate a new tax code for you.(1)
Historically our bonuses have been paid in April, and that’s frequently meant being taxed stupidly high for the first few months of the new tax year, as HMRC and payroll seemed incapable of realising the April payslip was not representative. I’ve more recently got into the habit of updating my full year earnings projection as soon as that April payslip shows on my HMRC account. After doing that, I’m normally taxed correctly pretty much from May onwards.
(1) if you are going to do this, then make sure your calcs are accurate!
Cheers mate. Just so I’m clear, when it settles down, due to the JSA P45, does that mean I’ll be paying a lot lower than normal tax until March, then get slugged, or will it adjust again between the P45 kicking and me earning my regular current wage?
I don’t really want to get used to bringing home X amount from now until March, if it’s not reality and my take home will dramatically reduce after March because I’ve been udertaxed? (I hope Im making sense)
Which March are you making reference to? March 2021?
As others mentioned, as you left your last job on 31 March 2020, that’s all nice and easy as it aligns precisely with the 19/20 fiscal year. (unless you got paid something else on/before 5 April!)
With regards 20/21 tax year, absent the JSA P45 you will likely be placed on an emergency tax code as others have suggested, which means you’ll likely get taxed at a higher rate than you should. Once your payroll dept gets the JSA P45 then the tax should normalise. Ideally immediately (so a big payslip the following month), but it can sometimes take a month or two to smooth out. That’s where I’ve found updating the HMRC Online projection helpful. So you might get a bit more initially, but hopefully well before March 2021 you should have moved towards your “normal” take home pay.
To add - if you are on emergency Tax this month (Look for a 1250L/1 or reference to Week1/Month 1) that’ll give you an indication (roughly and assuming Government dont get silly with rate changes) of what you can expect to pay in Tax from April 2021 and thereafter.
Yeah sorry mate, what I meant was March 202. In my mind (which is a dangerous place) I’m thinking once I’m on the right tax code for JSA levels of income, I would still have quite a few months of being on the much higher salary that I’m on now, so I’m wondering if there will be two adjustments, or if come March 2021, I will owe some for being on a lower code than I should have been?
Emergency tax codes normally overtax you if anything, so come the end of the year you’d likely be due something back if anything.
I would like to think it would normalise within a month or two of them getting your pre-employment pay info via the JSA P45.
The only thing I can see is that they normalise the early year overpayment of tax over the remainder of the tax year, in which case you could get used to a slightly higher level of take home pay (having suffered a suppressed take home pay now), before it truly normalising from April next year.