Some recent experience with changes to our client's codes suggests that people should pay close attention to these notices if they receive one and check that any change is correct.
The first problem I came across was with a client who has a full time job as a senior manager with a Local Authority. She earns a good salary and is close to the top of the basic rate threshold at about £40,000 per annum. She also does some occasional work for her husband's consultancy business. Her husband decided it would be fair if he paid her for this and started up a monthly salary of £100 per month. HMRC picked this up and in their wisdom decided to move the whole of the personal tax allowance from our client's main job to the little 'sideline' she was doing for her husband's firm. Luckily she noticed this, but not in time to stop her her next monthly salary being adjusted. As a result she received approximately £1,500 less than she was entitled to in her monthly pay packet. It was corrected in the following month but not without causing our client hardship and inconvenience.
The next error I heard about regarded the daughter of one of our clients who works in the charity sector. She receives a very modest salary and exists on a tight monthly budget. She did some project work with another charity and received a one off payment of £60. Again, HMRC picked this up and decided this was an additional part time job. They therefore moved part of the personal allowance over to their (incorrect) earnings estimate for this new 'job'. The consequence of this was that our client's daughter received about £150 less net pay than they were entitled to in their next pay packet. This was a significant proportion of their monthly income and they have had to borrow money so that they can meet their commitments until the PAYE code is adjusted next month.
So two examples here where HMRC have made false assumptions which have caused hardship and inconvenience for their 'customers'. I think more care here to check their assumptions with the individuals before changing the PAYE codes would have been the more courteous thing to do.
On a lighter note I received an email from a client who had just received his PAYE code and thought it was a bit high. He called HMRC and spoke to one of their helpline team. “Ah” she said .... “our mistake .... bit of a typo on our part in here but we seem to have put it down that you are receiving £90k in jobseekers allowance in addition to your salary”!
So please do check your PAYE codes. You might end up saving yourself a few pounds.
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