Payroll company has p45 but not changing tax code (UK)

Question

I started a new job in September but because I moved house was unable to get my p45 for my old job before receiving my first paycheque (it was sent to my old place).

I gave my P45 to payroll just after receiving my first paycheque, but when I received my second paycheque it was still on the old tax code. I contacted payroll and they seemed to think I hadn't given them the P45. After I corrected them they said it hadn't been processed yet.

I've just received my third paycheque and it's still on the old tax code. I contacted payroll and they said:

'the payroll company has your p45, so I don't think they'll be able to do anything. You'll need to contact HMRC.'

What do they mean by this? Do I need to contact HMRC? I'm concerned by the mixed messaging and lack of certainty in these responses.

Answer 1

There's some guidance on HMRC's website about dealing with late P45s. Essentially if HMRC has already sent them a tax code, then they have to use that even if the P45 gives them different information. If they haven't received a tax code from HMRC then they should update the tax code they have worked out from your new starter checklist with the one implied by the P45 (often just the code on the P45).

The situation is presumably complicated by the external payroll company especially if you can't talk to them directly. If you can keep pushing them you might be able to clarify which situation applies here.

In the end if you think your tax code is wrong it probably is best to talk to HMRC who should be able to get it updated. Also, even if you have the wrong tax code all year, you should be able to get your tax situation corrected after the end of the tax year, again by contacting HMRC.