Tax on wages question

littlestar1981

Hi,

I've just started a new job. It was too late to put me through payroll this month so I've been given an estimated pay by cheque for this month. My employer said if it ends up that she has estimated too high then it'll be deducted from next month. Fine...

BUT

This is the last month of the tax year, and I have not earned enough money to pay tax in the 10-11 year (was volunteering abroad for 8 months). How can I ensure I either don't get taxed on this months wage, or get this months pay separated so that the tax office know that it's March's wage and will therefore refund me the tax?

I'm worried that if it all goes on next months wage slip all in one I won't be able to get a tax refund in future as they'll say it's 11-12 earnings, not 10-11 earnings.

Hope that makes sense....

Mikeyorks

Presumably you had a P45? And the employer (helped by a word from you) should recognise no tax deduction needs to be made.

In effect you're getting an advance. That will simply be deducted from next month. So long as you sort out that no tax is deducted there should be no problem

littlestar1981

But the advance I've been given it what she estimates I'd get after tax and NI?

I'm just concerned that there's no official pay slip this month, so at the end of next month I'll get a payslip with 1.5 months wages, taxed, then minus the amount of my cheque, therefore I'll have been taxed for this months wage when I don't have to pay tax. Then when I try and query that they'll say it's in 2011-2012 wage slips therefore taxable.

Quenastoise

littlestar1981 wrote: »

But the advance I've been given it what she estimates I'd get after tax and NI?

Yes, done properly, the advance should have been for gross less tax and NI (provided that your income was not below the limits for tax and NI)

Surely there will be a pay run in March so the advance can be deducted from the March salary ? You seem to suggest that you started work around mid-March ?

If you had no income from employment in 2010/11 and therefore no P45 to hand in, make sure that you have completed a P46 and ticked the box saying that this is your first employment for the year

Assuming that your employment income for 2010/11 is below your personal allowance there should be no tax deducted from your March pay.

littlestar1981

No, I started on the 14th and the pay run had been done so I have a cheque and will next get paid end of April.

This is what I'm trying to explain, I've been given a cheque based on what my manager thinks I should get paid this month after NI and Tax. I'm assuming at the end of April my wage slip will show April and March pay, the whole lot will be taxed and then the cheque amount will be deducted. Meaning I've paid tax on March earnings when I don't have to.

I have had employment already this year, I did hand in a P45, my total income so far this year is only about £3500 and my pay this month won't take me over my tax free earnings allowance!

Mikeyorks

Clarify, with them, what they intend to do? As they need to give you a P60 and issue an equivalent P14 to HMRC for the part month.

The HMRC site appears to be deathly silent on the subject of advances. But if the advance is deemed to be net of tax / NI (despite neither is possibly due) .... then the advance should be deducted from the April gross before tax / NI is calculated?

littlestar1981

Mikeyorks wrote: »

.... then the advance should be deducted from the April gross before tax / NI is calculated?

Yeah maybe I'll ask them that. It's just confusing me as I'll have to have some form of wage slip for March pay, and its going to end up on April pay slip combined with April earnings, but I need the earnings to be separate as I don't have to pay tax on March earnings and I need to be able to show HRMC in some way how much I've earned in March, so if it's a case of getting a tax rebate in future I can show HRMC how much I shouldn't have paid tax on.

Typical this happens to me as we are changing tax years!

jimmo

Mikeyorks wrote: »

The HMRC site appears to be deathly silent on the subject of advances.

How about this?
http://www.hmrc.gov.uk/manuals/eimanual/EIM42280.htm

littlestar1981

Confusing....because it wasn't really an advance it was an estimate of this months earnings as payroll said they couldn't do a proper payslip this month;

Anyway, in the end Payroll did a proper payslip for me for this month showing nil tax deduction, I'm getting a cheque for the right amount and next month I'll get a payslip for April work only and paid by BACS as normal.

Sorted! thanks for all replies.