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TonyTax
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Second opinion] Which tax code is better BR X or K630 X?

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second opinion] Which tax code is better BR X or K630 X?
Assistant: Where is this? It matters because laws vary by location.
Customer: UK
Assistant: What steps have been taken so far?
Customer: I need to understand my tax codes
Assistant: Anything else you want the Lawyer to know before I connect you?
Customer: what is the difference

Hi. My name is*****'m looking at your question now and will post my answer or ask for more information here in a short while.

A BR tax code means that your pay will have tax deducted at 20%. So, if you earn £500 in a week, you will pay £100 in tax. BR stands for basic rate (20%).

The X in a A K630 X tax code means that you are taxed on your weekly or monthly earnings without account being taken of what has gone before. This probably means you owe tax from earlier and HMRC doesn't want to take it all at once causing hardship which a cumulative tax code would. The K indicates that your allowances have been exceeded by deductions in your tax code such as taxable employment benefits, a tax underpayment which is being collected from your current pay or an adjustment to make sure you are paying the correct amount of tax if you have more than one job for example. In this case, you are being taxed on a notional amount of extra income of £6,300 so as to try to get your tax back in order.

You will probably be paying more tax on a K code than on a BR code. However, the idea is to check your tax code and make sure it is correct. If you don't think it is you should call the tax office and have them look at it. They will probably ask you some questions so they can adjust the code if necessary.

I hope this helps but let me know if you have any further questions.

Customer: replied 4 days ago.
I have 2 jobs. First job (since sept 2019) I earn £31,000 annually which has tax code 1250T X
My other job I used to get paid £1000 per month and was on 1250L for that but when I got my new job I reduced hours on second job so I now get £400 per month and the tax code for it should be BR but its changed on HMRC website to K630 X

You were getting two personal allowances of £12,500 (code 1250L) and, since you are only entitled to one, you will have accrued a tax underpayment which is what HMRC are trying to claw back now. At 5 April 2020, you will probably still owe tax. You should have been on a BR tax code for the second job from April 2019 so now HMRC appear to be trying to collecting the tax that should have been paid in those six months. It's worth calling them to have the K code checked again but its probably about right. These things are worked out by computer software not people so it should be accurate.

Customer: replied 4 days ago.
I didn’t get two allowances because my second job only started on September

I get that but your personal allowance has been transferred to the September 2019 job as if you hadn't worked elsewhere in the previous six months. So, you have had £6,000 of personal allowances against your lower paid job until you started the new job at which point either your employer has given you a 1250L tax code because they may not know you have another job or HMRC did. I suspect your employer gave you the full tax code. Either way, you have to pay tax on the £6,000 you earned in the other job and HMRC have made the adjustment to the tax code on the lower paid job. I'd still call HMRC to have it all looked at again and to find out who instigated the 1250L tax code against the September 2019 job.

Customer: replied 4 days ago.
Tony I am sorry but I really don’t understand.
My personal allowance has been transferred to my main job now which I started in Sept 2019 but before that I only had 1 job where I was on tax code 1250L that was my sole job.
Since sept 2019 I have had 2 jobs. Main job is 1250L and second job should be BR but it is showing as K630 X
Customer: replied 4 days ago.
Where has £6000 come from

I'll try to explain it another way.

Customer: replied 4 days ago.
Thanks

You were in a job paying £1,000 per month on a tax code of 1250L. That means you can earn £1,041.66 per month tax free. So, the way I see it, is that you paid no tax on your £12,000 per annum job from April to September as the personal allowance was greater than your earnings of £1,000 per month. If you had left that job to start a new job, you would have handed your new employer a P45 and they would have used the tax code 1250L. Their tax deductions would have taken account of the pay and tax you had until you left the £1,000 per month job.

However, you didn't leave the £1,000 per month job and so you had no P45 to give to your new employer. They should have applied for tax coding instructions from HMRC and they may have done so which would have been the right thing to do. What has happened is that you have been put on a 1250L code in your new job so I'm guessing you paid little tax in your first two months in the job. Check your payslips. I'm also guessing you paid no tax in the first 6 months of the £1,000 per month job. Check your payslips and let me know what you find.

Customer: replied 4 days ago.
I have checked my payslips.
My salary wasn’t fixed £1000 every month because it depended on how many hours I did. I was actually on tax code 1248L (sorry for saying 1250L before)
Customer: replied 4 days ago.
I was also paying tax every month
Customer: replied 4 days ago.
I will attach my payslips

1250L isn't much different to 1248L.

I'll look at the payslips when you have uploaded them.

Customer: replied 4 days ago.
Payslip
Customer: replied 4 days ago.
Another payslip
Customer: replied 4 days ago.
Please see
Customer: replied 4 days ago.
Please take a look
Customer: replied 4 days ago.
As you can see I was paying tax on that job

You have paid tax but you were still getting £1,040 per month in tax free pay (£12,480 / 12).

Have you got payslips for the September 2019 job?

Customer: replied 4 days ago.
Why can’t I get the £1040 per month tax free?
Customer: replied 4 days ago.
Sept 2019 job payslip
Customer: replied 4 days ago.
This was NOV 19 payslip
Customer: replied 4 days ago.
Because at the time that was my only job when I was on 1248L (first job)

It was fine at the time. I need to see the other payslips.

Customer: replied 4 days ago.
now they are saying I have underpaid?
Customer: replied 4 days ago.
I have sent through the payslips for 2nd job (now main job) oct 2019 and nov 2019 payslips

You paid 20% tax in your first month with Wey. In month two they had you on a 1250T X tax code. You got £1041 in tax free pay and pay tax at 20% on the balance of £1,544 at 20%.

You are not on a cumulative tax code with Wey so you aren't getting two lots of allowances. Do you have the latest payslip for the other job?

Customer: replied 4 days ago.
Latest payslip for other job

I need to see the the total pay and tax to date.

Customer: replied 4 days ago.
Here

You have earned £7,500 and paid £195 in tax on your Learn Solutions income and you have earned £5,881 and paid £967 in tax on your Wey Education Services salary. Total pay £13,381. Total tax £1,162. You are entitled to £8,333 in personal allowance to month 8 (£12,500 / 8) so that leaves £5,048 taxable. Tax at 20% is £1,010 so you are overpaid by about £152 (£1,162 - £1,010).

Given that you are on two month 1 tax codes, you need to call HMRC and ask them to review each one and to change one or both if necessary.

Customer: replied 4 days ago.
What would you advise they need to be changed to?

You are on a month 1 code with your current job which is fine as you are not getting personal allowances given elsewhere. The other job is being taxed at 43% but as you have paid too much tax so far, I think it could now be changed to BR X (Month 1).

Customer: replied 4 days ago.
how will I explain it to HMRC to change it back to BR X?

It's difficult to say as I don't have access to the software HMRC use.

 

Just call HMRC and ask them to review your tax codes in light of the fact that to date you have overpaid by about £152 and if you continue to be taxed at 43% on your other job you will be overpaid by even more. As your main job is on a Month 1 tax code, you have not been given allowances which were given against the other job from April to September.

Customer: replied 4 days ago.
so my current job (sept 2019) job should stay at 1250L
But other job should be changed to BR
Customer: replied 4 days ago.
How can I get refunded the tax I have been overpaying

1250T X for the moan job.

 

BR X for the second job.

 

You will have to wait until the end of the tax year on 5 April 2020 to apply for any tax overpaid to be repaid to you.

Customer: replied 4 days ago.
thank you for your help
Customer: replied 4 days ago.
Why do you think it got changed to K630 X?

Thanks.

 

Would you mind rating my answer before you leave the site please.

I don't know. Possibly because your main job was on BR for the first month.

TonyTax and other Tax Specialists are ready to help you
Customer: replied 4 days ago.
Okay
Customer: replied 4 days ago.
Thank you

Thanks.