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Fortnightly Pay tax code query

Brightpay calculations don't agree with HMRC - first fortnight strandled 2 years

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I run fornightly payroll for 31 employees using Brightpay. In the past week I have received 5 P6 notices to increase the amount of tax deducted and put on Wk1/M1 code.

Our first pay period this year was on 12th April. As we are fortnightly paid Brightpay calls it period one and allocates 2 weeks free pay allowance, but HMRC are saying it should only have had 1 weeks allowance and thus the £40 ish pound underpayment.

Our last pay day of the year will be 27th March- therefore under HMRC's calculation employees will only receive 51 weeks allowance therefore they will overpay. The 'helpline' informs me that that is OK as when the employees receive their P60 they can request a refund. Seems like a lot of red tape for a presumed underpayment by the end of the year.  Also looks like we'll be in the same position next year.  

Do I have any authority to not change the tax codes?  Do all employees have to spend half an hour on the phone to demonstrate that by the end of the year they will have paid the right amount and have the decision reversed- for 31 employees that's almost 2 days work time lost.

Is there somewhere to appeal to? Employer and employee helpline will only pass me back and forth between them and Brightpay says their calcs are correct.


Replies (3)

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By neiltonks
18th Sep 2019 12:58

Brightpay is doing it correctly. To quote HMRC's CWG2 booklet "When working out PAYE using Tax Tables A, if you’re using a code on a cumulative basis, use the table for week 2 for the first payment after 5 April; even if the payment is made in the first week of the tax year. Use the table for week 4 for the second payment and so on up to week 52."

Not sure why HMRC are misinterpreting this, though. It's not normally a problem. We have many customers with fortnightly payrolls and I've never come across this situation.

You don't have authority to ignore the tax codes, though.

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By K81
18th Sep 2019 14:10

is this not because the tax codes have been issued on WK1/MTH1 basis?

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By Zarozinia
18th Sep 2019 14:44

Thanks I rang the employer helpline again, armed with the info from here. This time I spoke to someone who agreed that 2 weeks was the correct allowance for fortnightly pay but couldn't discuss individuals.
Brightpay have since come back to say that the FPS submissions have been quoting the wrong week. I have installed an update and submitted an additional FPS to correct previous submissions. So now I shouldn't receive any additional P6s but I wonder if they will automatically send reversals of the ones recently received?
Thanks for the guidance

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