Working part of the tax year and paying the correct amount of tax

Comstock

Hi, hope someone can advise me.

I have only earned £900 so far this tax year, because I have spent a fair proportion of it as a full time student. The £900 I have earned from one particular employment agency, but the work there has dried up and I've found full time work elsewhere.

How do I ensure I pay the correct amount of tax? I have completed a P46 for the new agency, but am I better off requesting a P45 from my old one? Does it make any difference?

Surely, as I've hardly earned anything this year so far, even if I work full time until the end of the tax yar I should be paying very little tax, if any?

Or do I have to overpay my tax and claim it back?

Valli

the simple answer to this is to add up all your earnings (to date and projected)
subtract, from that total your tax allowance (£6475 ?)
any left over is the amount you will pay tax on.

But for practical purposes if your tax allowance is £6475 that equates to £539 per calendar month (assuming paid monthly) so you will pay tax on any amount over that at a rate of 20%

Any over payment should be refunded to you at the end of the tax year.

If you have only earned £900 to date though then you still have a tax allowance of £5575 remaining to set against income up until the end of the tax year. Get the P45 from the agency to pass to your new employer.
As per THIS advice from HMRC -
P45

You get a P45 from your employer when you stop working for them. It's a record of your pay and the tax that's been deducted from it so far in the tax year. It shows:

• your tax code and PAYE (Pay As You Earn) reference number
• your National Insurance number
• your leaving date
• your earnings in the tax year
• how much tax was deducted from your earnings

A P45 has four parts - Part 1, Part 1A, Part 2 and Part 3. Your employer sends Part 1 to us and gives you the other three. When you start a new job, or claim Jobseeker's Allowance, you give Part 2 and Part 3 to your new employer or to the Jobcentre. You keep the remaining one - Part 1A - for your own records.
Your employer should automatically give you a P45 when you stop working for them. If not, ask for it - you're entitled to it by law.

HMRC website

Comstock

Thanks.

So it's vital I get a P45 from my old agency to pass to my new one?

Valli

It is UNLESS you're happy to wait until summer 2010 for your tax rebate...

what's your tax code BTW?

assuming 675L and assuming you started work on 1 November for the remainder of THIS tax year you can earn approximately £1150 per month before you pay tax!

(Don't forget NI is different though!)

chrisbur

Comstock wrote: »

Thanks.

So it's vital I get a P45 from my old agency to pass to my new one?

It is certainly best to get a P45 but not vital. Provided that you complete a P46 then the tax office know you have started working at your current job, they will then advise your current employer of your tax code, previous gross and tax paid ( ie the P45 details). They may have to first contact you and/or your last employer so it may well take longer to sort out than if you have a P45 but it will be sorted eventually. Also many P45s are issued with emergency tax on them; so if this is the case there will be the same sort of delay while your full details are obtained by the tax office and passed to your employer.

So certainly try to get a P45 if you can but if you can't ask for a P46(employers should ask you to fill one in or give the details for one but do not always).

Comstock

Thanks, chrisbur. I've already completed a P46 for my new agency. I don't start work for them until Dec 7th.

Will my new tax details be sorted by then, or should I still ask for a P45, or will that complicate things further?

Valli

Comstock wrote: »

Thanks, chrisbur. I've already completed a P46 for my new agency. I don't start work for them until Dec 7th.

Will my new tax details be sorted by then, or should I still ask for a P45, or will that complicate things further?

I personally would ask for the P45 for my own peace of mind - to check that the details so far are accurate.
Also you do not really want to start your new job on a BR tax code if it can be avoided...

chrisbur

Comstock wrote: »

Thanks, chrisbur. I've already completed a P46 for my new agency. I don't start work for them until Dec 7th.

Will my new tax details be sorted by then, or should I still ask for a P45, or will that complicate things further?

It is very unlikely that your tax details will be sorted by then, a P46 should be sent to the tax office when the first wage is paid so it will probably just be sitting on a desk somewhere in your new employer's payroll dept.
If you can get a P45 do so, it will not complicate anything, it can only speed it up. As I said earlier not all P45s have all the details needed so it may not get your tax sorted but it will help get it sorted quicker.

chrisbur

Valli wrote: »

................Also you do not really want to start your new job on a BR tax code if it can be avoided...

Totally agree everyone should avoid this (unless of course it is the correct code for you).
The best way to avoid a BR code, if you do not have a P45, is to fill in a P46 as soon as you start, then provided you can mark either option A or B (which should be everyone who does not have another job or taxable benefit or pension) then your new employer can put you onto an emergency code, 647L at the moment. In over 90% of cases the emergency code will be either your correct code or very close to it.