Tax help needed on New Job payslips

silv.surfer

My Neighbour 4 weeks ago started a Part-time Job Contract 18 hours @ £6.50 p.hr paid fortnightly + upto 6 hrs O/T if needed by Employer paid at Flat Rate.

He has just received his 2nd Payslip and I think he is being deducted to much Tax as he has been on JSA since Oct 2007.

With no other money than JSA except 6 weeks ago he signed-off and through an Agency went for a 30 hours x 8 wks Job that stopped after 18 hours was paid £128.88 for thiis but no JSA

He was also Sanctioned for 2 wks by Work Prog immediately before £128.88 Shortened Job no JSA then either.

I will put below the amounts I copied from the First 2 Payslips of his New Permanent Part-time Job ( O/T is extra time @ Flat Rate £6.50 p.hr)

1st Fortnight Payslip

£273.00 gross incl O/T hours
54.60 Tax Tax Code OT wk1/mth1
£218.40 Net


2nd Fortnight Payslip

£286.00 gross incl O/T hours
57.20 Tax Tax Code OT wk1/mth1
.96 NI
£227.84 Net


I think he is being charged Emergency Code - I dont think his JSA with 3 Removed JSA plus £128.88 on one week with no JSA has taken him over his Allowance £7475 for this year.

Because of the Disappearing Job he didnt get HB & CTB run-on or Job Start Grant for His New Job ( this has gone to Decision Maker for Review ) and he has applied for Low Wage HB & CTB and now has to pay £16 p.wk Rent - dont know CT yet - the preverbial Snail Service, unless wanting money from you then speed of light.

Can anyone on help me advise him what to do or who to contact to sort this Tax out.

Thanks for any help or advice.

mildred1978

silv.surfer wrote: »

My Neighbour 4 weeks ago started a Part-time Job Contract 18 hours @ £6.50 p.hr paid fortnightly + upto 6 hrs O/T if needed by Employer paid at Flat Rate.

He has just received his 2nd Payslip and I think he is being deducted to much Tax as he has been on JSA since Oct 2007.

With no other money than JSA except 6 weeks ago he signed-off and through an Agency went for a 30 hours x 8 wks Job that stopped after 18 hours was paid £128.88 for thiis but no JSA

He was also Sanctioned for 2 wks by Work Prog immediately before £128.88 Shortened Job no JSA then either.

I will put below the amounts I copied from the First 2 Payslips of his New Permanent Part-time Job ( O/T is extra time @ Flat Rate £6.50 p.hr)

1st Fortnight Payslip

£273.00 gross incl O/T hours
54.60 Tax Tax Code OT wk1/mth1
£218.40 Net


2nd Fortnight Payslip

£286.00 gross incl O/T hours
57.20 Tax Tax Code OT wk1/mth1
.96 NI
£227.84 Net


I think he is being charged Emergency Code - I dont think his JSA with 3 Removed JSA plus £128.88 on one week with no JSA has taken him over his Allowance £7475 for this year.

Because of the Disappearing Job he didnt get HB & CTB run-on or Job Start Grant for His New Job ( this has gone to Decision Maker for Review ) and he has applied for Low Wage HB & CTB and now has to pay £16 p.wk Rent - dont know CT yet - the preverbial Snail Service, unless wanting money from you then speed of light.

Can anyone on help me advise him what to do or who to contact to sort this Tax out.

Thanks for any help or advice.

Yes, he's being deducted 20% on everything as if he has no tax free allowance. That's what the code 0T is used for. Can he ring the tax office?

agrinnall

Did he give a P45 to his new employer or fill in a P46? If he didn't do either then 0T is correct until he sorts out with HMRC what his tax code should be (almost certainly the basic 747L in his case).

silv.surfer

Hi mildred1978

He cant phone Tax Office on Mobile - no credit - but if necessary can from my Landline as usual in similar situations.

Yes agrinall he has given a P45 to this New Job employer - it was a 3 part thing and he passed Front to employer and still has Partss 2 & 3 which I have asked him to let me have and a P60 from last year - all which I will get through letterbox later today. I will copy them and add them to his File in case needed later.

It is possible that P45 didnt reach Pay Office in time because it is distant and Supervisor is only point of contact at Shift Change to pass Documents and she is new also but helpfull.

I will update when I see the papers.

I have some back of env. sums myself below:

£137 x 26 pays = £3562 + £128.88 defunc Job = £3690.88 - £274 (2 no JSA pay ) = £3416.88 Total earn from JSA before New Job. Actual JSA isnt 26 pays shouldnt be full year only to New Job 19th Jan 2012. so even less.

I think that shows he is still inside his Personal Allow. this year at least, but I could well be wrong - I know I dont pay any Tax and have had Bank Tax on Savings returned - inside my Pers. Allow.

I have just multiplied his first Payslip gross amount x 26 weeks and that only totals £7098.00 assuming as average - so could be £1007 under New £8105 Allowance even next year or will they take it and have to give it back.

Thanks Both for your help

zygurat789

silv.surfer wrote: »

Hi mildred1978

He cant phone Tax Office on Mobile - no credit - but if necessary can from my Landline as usual in similar situations.

Yes agrinall he has given a P45 to this New Job employer - it was a 3 part thing and he passed Front to employer and still has Partss 2 & 3 which I have asked him to let me have and a P60 from last year - all which I will get through letterbox later today. I will copy them and add them to his File in case needed later.

It is possible that P45 didnt reach Pay Office in time because it is distant and Supervisor is only point of contact at Shift Change to pass Documents and she is new also but helpfull.

I will update when I see the papers.

I have some back of env. sums myself below:

£137 x 26 pays = £3562 + £128.88 defunc Job = £3690.88 - £274 (2 no JSA pay ) = £3416.88 Total earn from JSA before New Job. Actual JSA isnt 26 pays shouldnt be full year only to New Job 19th Jan 2012. so even less.

I think that shows he is still inside his Personal Allow. this year at least, but I could well be wrong - I know I dont pay any Tax and have had Bank Tax on Savings returned - inside my Pers. Allow.

I have just multiplied his first Payslip gross amount x 26 weeks and that only totals £7098.00 assuming as average - so could be £1007 under New £8105 Allowance even next year or will they take it and have to give it back.

Thanks Both for your help

The code number on this is the code number the employer HAS to use.

What is it?

chrisbur

silv.surfer wrote: »

Hi mildred1978



Yes agrinall he has given a P45 to this New Job employer - it was a 3 part thing and he passed Front to employer and still has Partss 2 & 3 which I have asked him to let me have and a P60 from last year - all which I will get through letterbox later today. I will copy them and add them to his File in case needed later.

The front section of a P45 is the part 1A this is the part you should keep for your records. Parts 2 and 3 are the parts the employer needs to put you onto the correct code. They cannot use part 1A. This means that so far as the employer is concerned they have not recieved a P45, they should have returned part 1A and asked for the parts 2 and 3 possibly this message has got delaid or lost, or failing that asked for the completion of a P46 which would allow them to use the emergency code 747L. As has been said without a P45 or P46 they are correct in using the OT tax code.

silv.surfer

Thanks chrisbur for the info about the P45 - His Supervisor is new also, so they both assumed the Front sheet - I will pop a note to him early Wed am before he goes in to Work to bring othes sheets in to me to photocopy before he hands them over and asks for Front Page returned - incase all disappear. I always go for safety first

What will happen regarding his Tax deductions when his Job Pay for all next year is going to be less than his Personal Allowance and well under the higher Allowance after April

I understood that the reason for the higher Pers.Allow next year was to take the Low Paid out of the Tax Scene - so are they going to have to Pay out and then get it all back again - His is about £500 under this Pers.Allow and after April will probably be £1000 under the New Allowance.

Thanks for your help.

chrisbur

silv.surfer wrote: »

Thanks chrisbur for the info about the P45 - His Supervisor is new also, so they both assumed the Front sheet - I will pop a note to him early Wed am before he goes in to Work to bring othes sheets in to me to photocopy before he hands them over and asks for Front Page returned - incase all disappear. I always go for safety first

What will happen regarding his Tax deductions when his Job Pay for all next year is going to be less than his Personal Allowance and well under the higher Allowance after April

I understood that the reason for the higher Pers.Allow next year was to take the Low Paid out of the Tax Scene - so are they going to have to Pay out and then get it all back again - His is about £500 under this Pers.Allow and after April will probably be £1000 under the New Allowance.

Thanks for your help.

When all goes correctly the tax deducted is correct at each payday. If no tax is due because of low earnings then no tax is taken. For example if someone is on monthly pay then month 1 they get 1/12 of their allowance set against that months salary, anything left is then taxed. Month 2 they get 2/12 of their allowance set againt months 1 and 2 salary, what is left tax is worked out on and tax paid in month 1 is deducted this leaves the tax to pay for month 2. Month 3 they get 3/12 of thier allowance set against months 1 2 and 3 of their salary what is left tax is worked out on and tax paid in months 1 and 2 is deducted to leave tax due in month 3. This goes on untill month 12 when tax due for the year is calculated on total earnings tax paid up to month 11 is deducted and what is left is the final tax due in month 12.
This way tax is constantly self-correcting, if for example say month 3 you have no earnings then you get 3/12 of your allowance set against your earnings so far ie months 1 and 2 and tax due is worked out this will be lower than tax due in month 2 as then only 2/12 of the tax allowance was used so now tax due at month 3 is taken from tax paid at month 2 and you get a tax rebate.
Of corse if an employee's earnings are below the tax allowance at any point in the year eg month 6 total earnings lower than 6/12 of tax allowance then no tax is due at that point and if any had been paid so far it would be refunded.
This means that to tax someone correctly you need a tax code number but you also have to know their earnings and tax paid previously this is the purpose of the P45. Of course it does not allways run smoothly P45s are late or get lost etc so while the tax office finds these details and send them to the employer you get the emergency tax, which is a best guess at what tax is due. In order to get a reasonable estimate the employee is asked for a few details on the P46 and when the tax details are recieved any over or under on tax due is adjusted. If there is no P45 the employer should ask the employee to complete a P46 but unfortuneately some do not they just go straight to the option for when an employee declines to complete a P45 they use the OT tax code.

EDIT Just to add that a P45 may not allways sort out the tax, they sometimes just carry forward an emergency code and then you have to wait for the tax office to send all the details to the employer. If it applies in this case (if parts 2 and 3 have the space for pay and tax blank and they only appear on part 1A then it is an emergency code) tax paid will be reduced or possibly stopped but no adjustment for old tax overpaid will be made yet. This will not happen untill the tax office send details to the employer which may not happen before the tax year end, in which case they will have to apply for a rebate when they get their P60.

silv.surfer

Wow Thanks chrisbur - am going to try and copy/paste your answer in post #8 to read and absorbe at leisure - you have put that aspect of Tax charges in a super explanation which deserves very carefull reading. I think your explanation is worthy of being added to the stickys for all to understand.:beer:

Again your point about Front Page of P45 being not correct one - It was actually worse, when he came down Wed AM with all the P45s and Parts etc - I found the the Part A1 handed in was in fact 20011 Not 2012 - so photocopied All of 2012 P45 - gave him back Parts 2 & 3 in env. and addressed to Payroll Office also asking for Error Part A1 of wrong one back. Hopfully this will be in time for next Pay which will be in 2 weeks.

We will probably phone the Tax Ofice next week as we have now on Thurs AM to phone re his Council Tax Low Wage discount where they seem to have dropped the ball - Rent Discount sorted but nothing apparently re CTB discount. - Loads of letters some days - crossing others - He is confused so hopefully sorting Thurs - then I will endeavour to explain to him how his Tax will work - He is a lovely bloke (but owing to drug activity in teenage years doesnt connect the dots ) and everything needs very careful explaining. That is why I am so pleased to be able to understand His Tax myself. Many Thanks again :A

How do I contact Webmaster or Mod to suggest looking at a sticky for your Under Personal Allowance Tax explanation ?

Just noticed your additiion - might not be able to see 2012 Part 1A but will look at Part 2 &3 in env. Short of time before he gets bus for work but will try but must sort Council Tax phoning with Authority.