Self Employed/Employed, Tax Codes

hollywoodxseeks

Hi! I'm confused and just wanted to ask here before I give HMRC a ring, this is all new to me and so I need a hand!

In the summer I registered as self employed for a project I did, which ran for a few weeks, and I only earned £550. Since then I have not been freelancing and so this is my only income.

I received an NI bill but know I don't earn enough to pay it, so have sent off for a CF10 form and am waiting for it to be approved/whatever happens. I am still registered as self employed in case any freelancing projects come up, but am not currently earning. EDIT: My small earnings form has actually arrived today!

Since then, I've started a Christmas Temp job and do various hours a week. I've just received a letter with my tax code on today, which is 500T. Is this right and is there anything I'm doing wrong? I just had a feeling that it's taking my self employment into account and I'm not sure if it's all okay..

With my small earning form having come through, am I now on the right tax code or should I ring to get this changed? I'm not sure if this is correct or not..

Hope you can help!

Delphina

I am posting based on an assumption that you will only pay tax at 0% or 20% in this financial year, that this is your first employment since April, and that your self emp income is going to be low...

Is the code wrong, if self emp income is coded out? You can choose to remove self emp from your code. Is the code wrong because of something else? I don't know, given the info you have.

Your tax code has got some deduction element (s) in there. This could be anything such as an underpayment of tax from prev year (s), your estimated annual self emp income, benefit in kind from prev employment which could have been apportioned or removed, some of your allowance has been given elsewhere due to you having a second job in the past or a private pension income, etc.

First of all, please investigate why the code is very low by checking your Tax Coding Notice for 2013-2014 tax year, if you still have it, or call HMRC. If it turns out that the deduction is only for your self emp income, you can ask HMRC to issue 944L on CUMULATIVE basis. If the new code takes too much time to arrive, you should simply do a P46 and tick statement A, preferably before your last payroll is due. As soon as you have done the P46, your employer should put you on 944L on CUMULATIVE basis. You should get all your PAYE tax refund backdated to April this year through your wages as soon as the new cumulative code is operated.

General info:

If you are both self emp and employed in the same tax year and you pay tax, you can either use some or all of your personal allowance against PAYE income, by having no self emp deduction in your tax code. This means your self emp income will be dealt with through SA only. The higher your self emp profit, the higher the SA bill.

If your self emp is going to be a lot higher, you may want to have self emp deduction in your tax code or even BR tax code to lower the SA bill.

Whichever way you choose, you should still pay the same tax amount in the end.

hollywoodxseeks

Hi, thank you for replying!

Based on what you've said (apologies if i've not understood this correctly, I had to read it all a couple of times and not sure I've made sense of it all!), I think that maybe my tax code is taking into account my self employment prior to me sending off the CF10 form, but now I am registered with my self employment as SEE.

Also, on my coding letter, in the notes it says 'We know you have another job or pension..you may get a P2 coding notice.. we have used some of your allowances to give you a tax-free amount at this job or pension.'

If this is the case, should I get in touch with HMRC and see if I can be moved onto a 944L code?

Hopefully my post makes sense - thanks so much for trying to help me out!

Delphina

Again, I am posting based on the same assumptions...

It is likely that self emp deduction is the case...

But...
Because you don't sound very certain about why the code is low, you should ask HMRC. If it is because of self emp, you can ask HMRC to remove the deduction and issue CUMULATIVE 944L to get your PAYE tax back.

Sorry if I have given you a bad headache. LOL

hollywoodxseeks

Thanks! I'll give them a ring to clear it all up I think - cheers for helping me out!

Delphina

No prob... As it is your temp job, it is important to get the CUMULATIVE code issued ASAP at least before the last payroll is due...

If you can't, you will have to wait until you get another job (if the first pay from that job is due by March) or wait until you file your 2013-2014 SA return. 6/4/14 is the earliest you can file that return!

Last but not least, you need to keep all your P45s or P60s because you need to declare the annual gross pay and tax figures from all your jobs on your tax return.

BTW, thanks for my first thank. LOL

Laurajo_2

It sounds like hmrc think you have two jobs. If you were temping before they may not have issued you a p45 so hmrc still think this ongoing?

A quick phone call should be enough to sort all this out.

hollywoodxseeks

Hello! I rang today and cleared it all up, it turns out my current employment was listed as secondary, with nothing in the primary slot. I've had my tax code changed so am now on 950L CUMULATIVE which is great - thanks for all your help folks!