Tax help needed

poet123

My son has started working for an agency and they are taxing him,this is his first fulltime role since leaving Uni(although he was employed part time). Should he be paying tax? I was under the inmpression that until your earnings s reached the taxable threshold for the year no tax was due. or do you have to reclaim it? if so when? Or has the system changed?

I know absolutely nothing about tax(except we pay too much!!)so any help welcome

LittleVoice

His tax allowance for the year will be divided into 52 weekly amounts (assuming he is paid weekly). So to date he will have been "credited" with three-quarters of his annual allowance.

If we had to earn our tax free allowance each year before paying any tax as we went along, most people wouldn't pay any tax in the first couple of months.

chrisbur

What tax code and tax basis is being used for his wages?
Did he hand in a P45 or complete a P46 when he started?

poet123

Yes,he did give in his p45. I am afraid I dont know what the code is although is does start BR, presume that means basic rate?

Unstoppable_2

Yes, BR. He would be given a BR or Week 1 tax code until the pay office get the proper tax code from the tax office.

3plus1

poet123 wrote: »

Yes,he did give in his p45. I am afraid I dont know what the code is although is does start BR, presume that means basic rate?

Yes, your son is on the basic rate, i.e. he is paying tax of 20% on all of his earnings. Most people have a personal allowance of about £6,035, which is an amount of money you can earn every year without being taxed on it. In practice, this amount is split over the year and there's a small amount in each payslip that hasn't been taxed at all.

Your son therefore has overpaid tax a little since starting work with his agency - given that he's only just started, the easiest solution would be for him to ring him the payroll department at the agency and explain that he's on BR, he's handed in a P45 and as far as he's aware, he should be on 603L. With any luck, the payroll administrator he speaks to should be able to adjust his tax code and he should be on the right code on his next payslip and get back the overpaid tax in his next paycheque.

If this isn't possible, your son will be able to fill out a claim form at the end of the tax year and get a repayment of tax in the form of a nice big cheque. Hopefully he should be able to get the agency to sort things though, and he won't have to do this.

fengirl_2

On no account leave it until the end of the year to sort this out as your son will be in a queue with thousands of others looking for a refund. If his employer is not able to activate the P45, he should urgently ring his tax office and ask them to issue a cumulative code so that the employer can make the refund.