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Can anyone explain my Income Tax Codes?


slh226
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Hello all, I hope I'm posting this in the right place.

For many years I've worked as an employee of a large organisation, a couple of years ago I started occasionally working for an agency (very small numbers of hours usually earning less than £500 per annum). The last 2 years combined Gross income for these jobs has been less than £35k p.a.

The first problem I had with HMRC was earlier this year, when they initially sent me my Tax codes they had me earning double my Income. I nearly had a heart attack when their letter seemed to suggest I owed £17k, I did get to the bottom of the problem; I changed jobs and location and their computer seemed to think I was working at both. This may or may not be related to my new problem.

On returning home from work today I received a letter giving me a new tax code for my agency work, the new code equates to me paying higher rate (40%) tax on any earnings from that employment. From what I can glean from the website it may be due to my current employment status. Although still working full time for one organisation I have 2 roles, which have 2 separate payslips, working for the agency is now viewed asa third job. Can anyone confirm that HMRC would automatically expect 40% income tax on these earnings, even though my total earnings are comfortably under the threshold?

The HMRC Website is as clear as mud, and as for the telephone lines............I do intend getting to the bottom of the issue by writing to them, but want to have the right info first.

Thank you very much for any help.

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You get a tax free allowance of £9,440.

On £9,441 up to £32,010 you pay basic rate which is 20%

On the amount of £32,011 and above you pay 40%

 

On £35,000 that would be

 

£22,570 taxed at 20% and the remaining £2,989 taxed at 40%

 

If you took payment for work somewhere else, that would automatically be taxed at 40% with no allowances.

Edited by Conniff
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