PAYE question when stopping contracting and starting permanent employment

neilio

I've been contracting for four years and am now closing down my limited company. I have returned to permanent PAYE employment. I stopped contracting and started my new job in February. Because of the date I started the new job and pay date every month, I am only getting paid by my new employer once (today, in fact) this financial year.

I haven't yet received a P45 from my accountant during the striking off process. I assume it won't happen for a while as they told me it can take a couple of months to finalise the year-end accounts accounting for company closure. I completed a P46 for my new employer and selected option B under 'Your present circumstances'.

When I received my payslip for today's pay, the PAYE Tax line is zero, so I've not paid any tax on this month's earnings. I queried with Payroll who (after exclaiming why I was asking why I'd been paid more than expected) told me they'd mistakenly processed my P46 as option A, resulting in paying zero tax this month. They have updated the record now and should be correct next month, and they said the PAYE Tax will correct itself, presumably meaning I will be taxed more than I usually would be.

I will soon have to do my Self Assessment to account for my personal income as a contractor this past ten months plus my income from my new job this past month. Presumably the SA will conclude that I will need to pay tax on this month's earnings, even though I'll be paying it anyway next month. So I'll have to pay tax twice for the same work? Is that a correct assumption? At what point will that correct itself and I get any surplus tax reimbursed from HMRC?

Pennywise

Your accountant should have given you the P45 on the last pay day. There was nothing stopping them from doing that. It's not delayed due to the finalising of accounts/CT returns etc. Payroll is completely separate.

If you're new job pays on 6th of each month, the 6/3/17 payday is the last of the current tax year, so it won't get adjusted next month, as 6/4/17 is the new tax year. You'll pay the tax that was due on it via your 16/17 SA return, not through a future payslip.

neilio

Thank you. Not sure why my accountant hasn't issued me a P45 then. I'll go back to them ask for it. When I eventually receive it, do I still need to pass it to my new employer at this stage if I've done the P46? I realise that might sound like a stupid question but it's been a while since I moved from one PAYE job to another, before I became a contractor.

Yes, next pay day is 6th April, first day of the new financial year. Thanks for clarifying the point about this month's payslip being mopped up by the SA, not next month's payslip.