Tax Codes - not paying tax?!?!

ParadiseKidd

Not sure where to post this!

Can someone help me out on tax codes? A friend of mine has just started a new job - 30 hours per week at minimum wage (£165.50). Their employer is only deducting £6.60 in NI and nothing in Tax?
I said that I didn't think this was right, and estimated they should be paying about £14 tax £7-9 NI per week, if they pay tax on all earnings over £5000.
However, I don't really know much about tax or codes, only that this person was on normal jobseekers (not income-based) for a few weeks prior to the job starting and therefore has had no other taxable earnings this tax year - but hasn't paid any tax so far so could already owe what is quite a bit to someone on minimum wage!!
Can anyone advise on this? Obviously it is a big tax / ni bill later in the year that they are trying to avoid.
Thanks!

ParadiseKidd

How do you know what tax code to use though? I just found this calculator which estimates without a tax code and it says 9.16 tax 7.21 ni... http://www.worksmart.org.uk/tools/tax_calc.php

ParadiseKidd

What makes you a basic rate tax payer?! I imagine he is basic rate, there are no other allowances or anything.

ParadiseKidd

Oh - they haven't put a code on the wageslip ?!?

Titch89

is the job temporary or permanent?

ParadiseKidd

Its a permanent job

floss2

So, let me get this straight.....

No tax code AT ALL on the payslip?
No tax paid?

It may be that they have not yet earned enough in this tax year to pay any tax through PAYE - so if they have earnt less than £1359 monthly gross to the end of June or £1470 weekly gross to 4/7/08, then they are not yet due to pay any tax. Then once they have gone over the rate of £105 a week / £453 a month accrued from 5 April, they will pay tax at 20%.

whatatwit

As long as your friend handed in her P45 from when she signed off to her new employer, then the above sounds correct.
As the employer is deducting National Insurance, then it all sounds above board.
Do tell your friend though that this will not continue, once they have earnt over the tax free amount for the year so far (it rolls over week to week) then they will start to be taxed.