Changing Jobs and New Employments
Tax Guide for Employees guide
You may query an unexpected change in the tax or National Insurance deductions when you change jobs; or you may think you are paying too much tax, or are due a refund.
What you need to know
The tax codes for someone changing their main job should come from form P45. This form should be given to you by your former employer.
The appropriate page of the P45 should be given to the new employer. Sometimes the issue of a P45 by the former employer is delayed. This can mean that the new employer uses an emergency code.
People returning to work from benefits may receive a P45 from the jobcentre. The tax code on this P45 needs to be checked to ensure that it is appropriate. In particular, watch out for Month 1 and Week 1 codes – these may be difficult to spot as they are no longer highlighted on HMRC P2 coding notices so you may need to ask your employer, or HMRC. These are temporary codes, and could mean that you will pay too much tax. You should then phone HMRC to get your code changed to a cumulative code.
If you have no P45, perhaps because you were on a career break or self-employed before you started employment, then the employer should use a Starter Checklist to work out what tax code to use. (Under RTI, the Starter Checklist replaces form P46).
Tax codes on return to work can be affected by the receipt of taxable out-of-work benefits.
Employers who are in Real Time PAYE Information (RTI) for PAYE no longer send P45 forms to HMRC. Instead information about joiners and leavers is included in their RTI returns.
Employees still need to provide new employers with information for the Starter Checklist (i.e. confirm that this is their only or main job etc.) or give their new employer a P45 from their previous employer.
What might go wrong?
P45 information may be processed incorrectly
As an employee, you should ensure not only that the correct page of the P45 is handed to your current employer, but also that the P45 is processed correctly. If the form has been correctly processed, your previous pay and tax details, along with your previous PAYE code should be shown on your new payslips and the year end form P60, or P45, if you leave before the end of the tax year.
Your tax codes may be incorrect
If you change jobs or take an additional job, your tax codes may no longer be correct. You may be receiving your tax-free personal allowance more than once – and so underpaying tax, or you may be paying too much tax.
What action should I take?
If you think the P45 has not been processed correctly then you should take this up with your employers. If this does not resolve the position, then you should contact HMRC on 0300 200 3300.
If you think your tax codes could be wrong, check the section – Understanding your tax code.
See also the TaxAid website section PAYE and tax codes
The situation of people with more than one source of income under PAYE is discussed on the TaxAid website at – PAYE with two jobs