Just to echo the importance of this, I had to swap to a new umbrella at the start of April (due to the agency enforcing a PSL). It took a while to sort out the paperwork, so I had 2 weeks with no money, then I got paid for 3 weeks at once. A few days later, I had an email from HMRC to say that my tax code had changed, but I assumed that this was due to the new financial year and/or the new umbrella company. So I wasn't too concerned, and I put this in my procrastination pile.
When I got paid for week 4, it was significantly lower than expected, so I belatedly checked my tax code. Basically, HMRC had assumed that my payment for week 3 would be the same every week, so my annual income would be 3 times the actual amount! Based on that projection, my personal allowance had dropped to zero, so they gave me a tax code that started with a K:
Tax codes: If you have a K in your tax code - GOV.UK
After I saw that, it was easy enough to change my expected income, and my payment for week 5 was higher than normal (because the PAYE was reduced to balance out week 4).
If I hadn't done anything, I don't know whether HMRC would have automatically adjusted the tax code again (after a series of lower weekly payments), but it's best to stay on top of this. I.e. if you get an email from HMRC about your tax code changing, check it immediately.
NB The email notification won't tell you the new code, so you'll have to log into their website to see it.
When I got paid for week 4, it was significantly lower than expected, so I belatedly checked my tax code. Basically, HMRC had assumed that my payment for week 3 would be the same every week, so my annual income would be 3 times the actual amount! Based on that projection, my personal allowance had dropped to zero, so they gave me a tax code that started with a K:
Tax codes: If you have a K in your tax code - GOV.UK
After I saw that, it was easy enough to change my expected income, and my payment for week 5 was higher than normal (because the PAYE was reduced to balance out week 4).
If I hadn't done anything, I don't know whether HMRC would have automatically adjusted the tax code again (after a series of lower weekly payments), but it's best to stay on top of this. I.e. if you get an email from HMRC about your tax code changing, check it immediately.
NB The email notification won't tell you the new code, so you'll have to log into their website to see it.
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